ARR (Annual Recurring Revenue)

ARR (Annual Recurring Revenue) is the annualized version of MRRGlossaryMRR (Monthly Recurring Revenue)The total recurring revenue from active subscriptions normalized to a monthly basis — the central financial metric for any subscription-based mobile app.. The formula is trivial: ARR = MRR × 12. A subscriptionGlossarySubscriptionA recurring in-app purchase that charges the user on a fixed cadence (weekly, monthly, annual) until they cancel. business with $1M MRR has $12M ARR; one with $5M MRR has $60M ARR. The metric is widely used in B2B SaaS investor / board communications and increasingly in larger consumer subscription mobile apps that share reporting conventions with B2B peers.

ARR vs MRR — when to use which

• MRR is better for operational analysis — month-over-month growth, cohort tracking, churnGlossaryChurnThe rate at which users stop using an app (general churn) or cancel a subscription (subscription churn) over a time window — retention's mathematical complement. analysis. The monthly granularity matches business cadence.
• ARR is better for investor / board / strategic communication — annual-revenue framing matches how external stakeholders think about business scale. "We hit $100M ARR" is the natural way to communicate scale; "$8.3M MRR" sounds smaller even though it's the same business.
• Most mature subscription apps track both in their dashboards.

What ARR signals to investors and operators

• Scale milestones: $1M ARR (early traction), $10M ARR (Series A-B benchmark for B2B; comparable for premium consumer subscription), $100M ARR (large scaled business), $1B ARR (megacap subscription business).
• Growth rate matters more than absolute ARR: a $5M ARR business growing 300% year-over-year is more valuable than a $20M ARR business growing 20% year-over-year.
• Net Revenue RetentionGlossaryRetention (D1 / D7 / D30)The percentage of users from a cohort who return to the app N days after install. D1 = day-1 retention, D7 = 7-day, D30 = 30-day. The single most important non-reven... (NRR) alongside ARR: the percentage of last-year ARR cohort retained this year, including upgrades. NRR > 100% means cohorts expand over time (rare and valuable). NRR < 90% means cohorts churn faster than expansion compensates.
• CAC paybackGlossaryPayback Period (CAC Payback)The time it takes for cumulative revenue from an acquired cohort to equal what you paid to acquire it — the moment a cohort turns cash-flow positive. A duration, not... alongside ARR: how many months of ARR per customer to recover acquisition cost. Healthy SaaS targets 12-24 months; consumer subscription mobile usually shorter (3-12 months) because LTVGlossaryLifetime Value (LTV)The total revenue (or gross profit) you expect a single user to generate over their entire relationship with the app — the denominator of every UA decision. / CACGlossaryCAC (Customer Acquisition Cost)The total cost of acquiring one customer — paid ads PLUS non-ad acquisition costs (SEO, content, sales, partnerships) divided by acquired customers. ratios are tighter.

ARR vs total revenue: an app with $10M ARR may have higher or lower total revenue depending on non-subscription revenue streams:

• ARR-only revenue: 100% recurring. Pure subscription apps.
• ARR + IAPGlossaryIn-App Purchase (IAP)Any purchase made inside an app after installation — consumables, non-consumables, or subscriptions. Processed by Apple or Google, who take a 15-30% commission.: subscription + occasional IAP. Common in mid-tier consumer apps.
• ARR + ads: subscription tierGlossarySubscription TierA distinct subscription level with its own price and feature set — typically 2-4 tiers (e.g., Free / Plus / Pro / Premium) covering different willingness-to-pay segm... + ad-supported free tier.
• ARR + IAP + ads: hybrid monetization. Most successful consumer mobile apps in 2026.

Most mobile reporting separates ARR from non-recurring revenue lines — ARR carries more multiplier-weight in valuations because it's more predictable.