Annual Recurring Revenue (ARR) is the amount of predictable revenue your company expects to make each year from subscriptions or long-term contracts. It’s a core metric for SaaS and other recurring revenue businesses because it helps you track growth, plan budgets, and forecast more reliably.
ARR only includes the recurring part of your income, not one-off payments like onboarding or setup fees.
Example:
If you have 100 customers paying €2,000 per year, your ARR is €200,000.
If one of them upgrades to a higher tier and starts paying €3,000 annually, your ARR increases to €201,000.
It’s a simple number with big impact. Investors love it because it reflects the health and momentum of your business.