Annual Run Rate (ARR) is the yearly version of Monthly Recurring Revenue (MRR). It helps project future revenue for the year, based on the current monthly revenue. The ARR assumes that nothing will change in the year ahead – no churn, no new customers, and no expansion. While this might seem unrealistic, ARR is a useful tool to predict long-term growth and visualize the size of your business.
To calculate ARR, you simply annualize your MRR by multiplying it by 12. For instance, if your MRR for the last month was $100k, your ARR would currently be $1.2M.