What is ARR (Annual Recurring Revenue)?

Annual Recurring Revenue (ARR) is a metric that calculates the predicted, consistent income a business receives from its customers over a year. It's frequently utilized in the software-as-a-service sector and is determined by multiplying the number of clients by the yearly average revenue per customer. ARR is an essential indicator for SaaS companies as it shows the company's growth prospects, customer retention, and capability to generate predictable and consistent revenue.