There can be significant confusion over the term ARR, its use and the measurement of ARR because it feels and sounds like a measure of “revenue” in the context of revenue recognition. However, ARR is not necessarily a measure of recognized revenue.
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ARR is an acronym for Annual Recurring Revenue, a metric for SaaS or subscription businesses with term subscriptions. ARR is the value of the contracted recurring revenue components of your term subscriptions normalized to a one year period.
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There can be significant confusion over the term itself, the use, and the measurement of Annual Recurring Revenue because it feels and sounds like a measure of “revenue” in the context of revenue recognition.