Annual Recurring Revenue (ARR) is a financial metric that measures the portion of a company's revenue that is expected to recur on an annual basis. This metric is typically used by companies that offer subscription-based products or services, as it provides a way to measure the long-term value of a customer.
For example, a company that sells software as a service (SaaS) might have a customer who pays $100 per month for a subscription to the software.
In this case, the customer's annual recurring revenue would be $100 x 12 = $1,200.
This means that the company can expect to receive $1,200 in revenue from this customer on an annual basis, assuming that the customer continues to renew their subscription.
