What is Annual Recurring Revenue (ARR)?
Annual recurring revenue is the yearly value of all active subscriptions, calculated as MRR multiplied by 12. It expresses the same recurring revenue as MRR but on a yearly scale, which makes it the standard metric for annual contracts and for communicating with investors.
ARR is most meaningful for businesses with annual subscriptions or longer sales cycles, where a yearly view smooths out monthly noise. Like MRR, it excludes one-time and non-recurring revenue so the number reflects only predictable income.
ARR is frequently used as a milestone marker — crossing $1M ARR, for example — and as the basis for company valuation in subscription businesses.
Why it matters
ARR is the language investors and acquirers speak. Framing your traction in ARR makes your progress legible to the people who fund and value the business.
It also gives founders a clean, big-picture view of scale that monthly figures can obscure, helping with longer-term planning and goal setting.
How Distro helps
Distro helps you build the consistent acquisition habit that turns small monthly gains into meaningful ARR growth over a year. Get your free growth report to see your path forward.