ARR is the annualized value of recurring subscription revenue. Learn how ARR decomposes into the New, Expansion, Contraction and Churn waterfall.
Annual Recurring Revenue (ARR) is the value of contracted recurring revenue normalized to a one-year period. ARR = MRR × 12 for monthly subscriptions, or contract value ÷ contract years for multi-year deals. In a SaaS KPI tree, ARR is the canonical root metric and decomposes into the waterfall: Ending ARR = Beginning ARR + New ARR + Expansion ARR − Contraction ARR − Churned ARR. Each component maps to a distinct go-to-market motion.