Plain-language questions
Ask for annual recurring revenue (ARR) per month, customer or product in the SQL Explorer with AI. The AI writes the SQL, you see the query and run it yourself; the AI only receives metadata.
KPI · Subscriptions and SaaS
Annual recurring revenue (ARR): formula and example.
Annual recurring revenue (ARR) is the recurring subscription revenue from your active customers, expressed as a yearly amount. ARR is usually calculated as MRR × 12. Businesses selling mostly annual contracts, and investors, use ARR to describe the size and growth of a subscription business.
Annual recurring revenue (ARR) formula
MRR × 12
Worked example
At the end of August, Acme's subscription service has MRR of €40,000. ARR is €40,000 × 12 = €480,000.
Fictitious figures for Acme Groothandel, a sample wholesaler.
How to read this KPI
Rising ARR means the structural size of your subscription business is growing. Compare ARR with the same month last year and against plan, and split growth into new customers and expansion from existing ones. Because ARR is a snapshot, it says nothing about how much of that revenue you will still have in twelve months; retention metrics cover that.
Pitfalls with annual recurring revenue (ARR)
- Including one-off revenue or usage spikes, so ARR looks higher than what structurally recurs.
- Confusing ARR with last year's revenue; ARR looks forward from today.
- Including signed contracts that have not yet started without stating so separately.
SQL & DAX
Calculating annual recurring revenue (ARR) in SQL and DAX
Two examples on a fictitious data warehouse for Acme Groothandel: a PostgreSQL query and a measure for a Power BI model. Adjust table and column names to your own model.
SELECT COUNT(DISTINCT customer_id) AS customers,
SUM(mrr) AS mrr,
SUM(mrr) * 12 AS arr
FROM subscriptions
WHERE started_at <= current_date
AND (ended_at IS NULL OR ended_at > current_date);ARR =
[MRR] * 12
ARR per Customer =
DIVIDE([ARR], DISTINCTCOUNT(Subscriptions[customer_id]))In ENABLE
Tracking this KPI in ENABLE
In your Power BI dashboard
Define the KPI as a measure in your Power BI model and show it in the portal, with "Last refreshed" next to it. Access profiles and optional row-level security decide who sees which figures.
Custom dashboards (pilot)
Add the KPI as a tile to a custom dashboard, compared with last year. The Dashboard Builder is a pilot and can be switched on per client.
Monthly targets
With the built-in Targets app you set a target for the KPI per month, so you see actuals and target side by side.
FAQ
Frequently asked questions
How do you calculate ARR?
The usual method is MRR × 12: take the monthly recurring revenue from all active customers and multiply it by twelve. With MRR of €25,000, ARR is €300,000. One-off charges are left out.
What is the difference between ARR and MRR?
ARR and MRR measure the same thing on a different scale: MRR per month, ARR per year. Businesses with mostly monthly plans tend to steer on MRR; those with annual contracts more often on ARR. The conversion is ARR = MRR × 12.
Is ARR the same as annual revenue?
No, ARR is today's recurring revenue projected over a year. Annual revenue in the accounts looks back and includes one-off revenue and customers who left part-way through the year. In a growing business, ARR is therefore often higher than last year's revenue.
Further reading
- KPI librarySaaS KPIs: MRR, churn and more explainedSubscription KPIs track recurring revenue: what comes in, what grows and what drops away. The data comes from your subscription or payment system and your CRM.Read more
- ResourcesHow to build a KPI dashboard: steps and examplesA KPI dashboard is an overview of the key figures you use to steer towards your goals, such as revenue, margin, on-time delivery or absenteeism. A good KPI dashboard does not start with the software, but with the decisions it needs to support. You then choose a limited number of KPIs, define them, sketch the dashboard and only then build it.Read more
- SolutionPower BI dashboard portal: share dashboards securelyShare your Power BI dashboards securely in your own portal, with role-based access.Read more
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