Annual Recurring Revenue (ARR)

A vendor metric for the annualized value of all active subscription contracts, normalized to a single year.

ARR is the SaaS-side equivalent of a buyer''s annualized SaaS spend. It includes recurring subscription revenue and excludes one-time fees, professional services, and non-subscription transactions. Vendors use ARR to size their business and to set growth targets. Buyers can use a vendor''s ARR profile (concentration in mid-market vs. enterprise, growth rate, churn rate) as a signal of vendor stability when evaluating multi-year commitments.