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0:00 - Intro
0:11 - ARR = Annual Recurring Revenue
0:45 - Spreadsheet Example
2:02 - Outro

ARR (annual recurring revenue) is an imaginary number.

ARR answers the question, "What if we all of this month's subscription revenue and multiplied it by 12?"

The answer imagines that we neither add nor subtract any customers for the next year (which is why it's imaginary).

ARR = Only our subscription (recurring) revenue multiplied by 12 (annualized).

One more thing: To calculate ARR (annual recurring revenue) correctly, we need to understand MRR (monthly recurring revenue).

Here's a quick video on MRR:
   • What's the difference between Run Rat...  

MRR is a real number. It's the combination of the monthly subscription revenue plus this month's portion of all current annual subscription revenue. This can make it a little hard to calculate, which is why the Rocket Pro Forma template for startup financials does it automatically for you.

Once we know the MRR, we can multiply it by 12 to get the ARR.

Check out the Fast Track Financials Pack:
https://rebrand.ly/FastTrackFinancial...

Grab the Rocket Pro Forma startup financials template:
https://RocketProForma.com

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