To smooth out variations in Annual Run Rate (ARR) from month to month, some companies choose to calculate their ARR based on their quarterly Monthly Recurring Revenue (MRR). They do this by multiplying the total recurring revenue from a quarter by four. Instead of looking at just one number for ARR, it's most important to look at the trend over time to see how fast a company is growing.
This method can help to reduce the impact of any significant fluctuations that may occur from one month to the next, which might distort the ARR if calculated based on a single month's MRR. For example, if a company signs a large contract in one month, or if it's a seasonal business that has a particularly busy month, calculating the ARR based on that month's MRR could give an inflated sense of the company's recurring revenue for the year.