MRR is the predictable monthly revenue from active subscriptions; ARR is that same figure annualized (typically MRR × 12).
MRR and ARR are subscription-business-specific metrics. They measure recurring, contracted revenue, not one-time sales, which is why they don't apply cleanly to transactional ecommerce or one-time-purchase businesses. ARR as "MRR × 12" is a run-rate projection, not a guarantee. It assumes current MRR holds steady for a full year, which ignores both churn and expansion that will actually occur.
Investors and operators typically break MRR growth into components (new MRR, expansion MRR, and churned MRR) because "MRR grew 10% this month" hides whether that came from strong new sales, strong expansion, low churn, or some mix of all three.
ARR
ARR = MRR × 12Related terms