Annual Recurring Revenue (ARR) Calculator
Annual recurring revenue (ARR) is the normalized, annualized value of your recurring subscription revenue. It is the headline run-rate metric for subscription businesses and the number most investors ask for first. Enter your monthly recurring revenue, or your subscriber count and average price, to compute ARR, along with the impact of new and churned revenue on your net ARR.
ARR formula
ARR = MRR * 12
Net new MRR = new MRR - churned MRR
Net new ARR = net new MRR * 12
Projected next-month ARR = (MRR + net new MRR) * 12
ARR simply annualizes recurring monthly revenue. It excludes one-time fees and non-recurring services. Net new ARR shows the annualized growth contribution from this month's expansion minus contraction.
Worked example
A SaaS company has 50,000 dollars in MRR. ARR = 50,000 times 12 = 600,000 dollars. This month it added 5,000 dollars in new MRR and lost 2,000 dollars to churn, so net new MRR is 3,000 dollars and net new ARR is 36,000 dollars. Projected ARR next month is (50,000 + 3,000) times 12 = 636,000 dollars.
Notes on ARR
- ARR should only include recurring revenue. Exclude one-time setup fees, professional services, and usage spikes that do not recur.
- ARR equals MRR times 12 by definition; the two metrics carry identical information at a point in time.
- Net new ARR (expansion minus contraction and churn) is the clearest single measure of growth momentum.
- Annual contracts billed upfront still contribute to ARR on a normalized monthly-equivalent basis.
Annual Recurring Revenue (ARR) Calculator: frequently asked questions
What is the difference between ARR and revenue?
ARR measures only recurring subscription revenue annualized, while total revenue (GAAP revenue) includes one-time fees, services, and any non-recurring income. ARR is a forward-looking run-rate, not an accounting figure.
How do I calculate ARR from MRR?
ARR equals MRR multiplied by 12. If your monthly recurring revenue is 50,000 dollars, your ARR is 600,000 dollars.
Does ARR include churned customers?
ARR at a point in time reflects only currently active recurring revenue. Churn reduces ARR. This calculator shows net new ARR so you can see the combined effect of new business and churn on your run-rate.
Is ARR the same as bookings?
No. Bookings are the total contract value committed by customers, which may include non-recurring amounts and multi-year terms. ARR is the normalized annual run-rate of recurring revenue only.
Sources and methodology
- ARR is defined arithmetically as MRR multiplied by 12; no external figure is hardcoded.
- U.S. Securities and Exchange Commission: investor and filing reference.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.