Annual Recurring Revenue ARR
The yearly value of a company's recurring subscriptions, stated as a single annualized number.
The fork, why two teams get different numbers
Two live definitions collide. Growth/board reporting uses RUN-RATE ARR = current MRR × 12, a snapshot annualized. Finance and many auditors prefer CONTRACTED ARR = the annualized value of the recurring terms actually signed and active. They diverge whenever a subscription started or ended mid-month, when a contract has scheduled step-ups, or when a big deal is signed but not yet live. A third camp reports RECOGNIZED run-rate ARR (last period's recognized recurring revenue annualized), which lags the other two. ARR is also routinely confused with GAAP revenue by readers who assume "annual revenue", it is neither audited nor GAAP.
The trap
Annualizing a month that contains anything non-recurring.
- The full trap, worked on a real export
- Every formula variant, spelled out
- The reconciliation anchor, what to tie it to and when to refuse
Reference: FASB ASC 606 · IFRS 15 · SaaS operating-metric convention (no single standards body)