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MetricsSaaS

Annual Recurring Revenue (ARR)

The predictable, recurring revenue a SaaS business earns annually from active subscriptions.

ARR is the normalised annual value of all active subscription contracts. It is the primary health metric for B2B SaaS companies. ARR growth is driven by new business (new logos), expansion (upsells and cross-sells), and reduced by churn (cancellations and downgrades). For PMMs, ARR impacts campaign prioritisation: high-ARR segments get more investment, and expansion plays are often more cost-effective than new business.
Related terms
Churn Rate

The percentage of customers or revenue lost over a given period.

Net Revenue Retention (NRR)

A metric that measures revenue from existing customers including expansion, contraction, and churn.

Customer Lifetime Value (LTV)

The total revenue a company can expect from a single customer account over the life of the relationship.

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