Annual recurring revenue (ARR) is the yearly value of all active subscriptions. It's usually monthly recurring revenue multiplied by 12.
Like MRR, it counts only repeating subscription revenue, not one-time payments, setup fees or lifetime deals.
ARR is the common way to describe the size of a subscription business once revenue is large enough that monthly swings matter less.
Why it matters for a launch
ARR is the number investors, acquirers and other founders use to compare SaaS businesses, so it's worth knowing how to calculate it honestly.