Skene
PLG term

Annual recurring revenue (ARR)

Annual recurring revenue (ARR) is the annualized value of recurring subscription revenue, calculated as MRR × 12. It provides a longer-term view of revenue that is useful for annual planning, investor reporting, and company valuation. In PLG, ARR growth is driven by a combination of new customer acquisition, expansion within existing accounts, and strong retention.

Revenue
Also called: ARR, Annual revenue, Annualized recurring revenue
About this term

This page is part of the Skene PLG glossary. Use it as a reference when writing specs, dashboards, or playbooks that rely on this concept.

Canonical glossary index: /resources/glossary

Definition

ARR is MRR multiplied by 12, representing the annual value of your current recurring revenue.

It assumes current MRR continues for a full year—it is a snapshot, not a forecast.

When to use ARR vs MRR

Use ARR for annual planning, board reporting, and fundraising conversations.

Use MRR for month-to-month operational tracking and identifying short-term trends.

Enterprise-focused companies often emphasize ARR; SMB-focused companies may emphasize MRR.

ARR milestones in SaaS

Common milestones: $1M ARR (product-market fit signal), $10M ARR (scaling stage), $100M ARR (growth stage).

ARR growth rate matters more than absolute ARR for early-stage companies.

Implementation notes

  • Use ARR for external reporting and MRR for internal operations.
  • Be clear about whether ARR includes committed (signed) or recognized revenue.
  • Track ARR growth rate (year-over-year) as a key indicator of business health.