The annualized version of MRR. It represents the recurring revenue a company would generate over a year based on the current month's active subscriptions.
Why it matters: ARR is the standard metric used for valuation in enterprise SaaS. Startups are often valued at a multiple of their ARR (e.g., 10x ARR).
In practice: If your MRR is $50,000 in December, your ARR is $600,000.