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by Undo Capital
December 11, 2025
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What Is ARR (Annual Recurring Revenue)?

ARR (Annual Recurring Revenue) is a key business metric that shows the predictable yearly income a company generates from recurring subscriptions or contracts.

ARR (Annual Recurring Revenue) Meaning

The ARR meaning focuses on stability and growth visibility. To define ARR in practice, it represents the total value of recurring revenue a business expects to earn over 12 months, excluding one-off sales. A clear ARR definition helps founders measure traction, forecast cash flow and benchmark performance over time. Investors also rely on ARR to assess scalability, valuation and long-term sustainability, especially in SaaS and subscription-based models. ARR stands for predictable growth and is a core indicator of business health.

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Disclaimer: Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. We do not provide investment advice, financial advice, or tax advice, nor are we regulated by the Financial Conduct Authority (FCA). Participating in startups and early-stage enterprises carries inherent risks, including limited liquidity, absence of dividends, potential loss of investment, and dilution. Any decisions regarding investments should be made independently by the investor as part of a well-diversified portfolio.