Recurring Revenue
Money
Recurring Revenue is a measure of the predictable and recurring revenue components of your subscription business. It's an important KPI for subscription-based companies like software-as-a-service (SaaS) providers as it provides a clear picture of revenue patterns and growth. Typically measured as Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR). Allows businesses to track and predict future revenue, which is essential for budgeting, forecasting, and business planning.
Formula
Sum of all periodic payments from subscribers or contracts
Example
If a SaaS company has 500 customers paying $100 per month and 100 customers paying $1,000 annually, the ARR is 500 x $100 x 12 + 100 x $1,000 = $700,000; the MRR is ARR divided by 12 months ($59,167).