What Is Annual Recurring Revenue (ARR)?

By Kristi Waterworth – Updated Jun 16, 2025 at 11:37 PM

Key Points

Annual recurring revenue (ARR) is revenue generated by companies through consistent subscription payments.
ARR reflects new customer acquisition, renewals, upgrades, downgrades, and churn.
Investors assess ARR to gauge subscription-based revenue trends and company growth.

Many types of businesses have special metrics you can use to evaluate their business model more deeply. For example, companies that have a lot of subscription activity may use annual recurring revenue (ARR). Read on to learn more about this metric and what it includes.

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A business person calculating profit from revenue. — Image source: Getty Images.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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