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What is ARR?
ARR is the yearly money a company expects from its regular customers, based on what they pay now.
- Category Business & money
- Also called annual recurring revenue, run rate, annualized revenue
- Updated 20 Oct 2026
ARR, explained simply
ARR stands for annual recurring revenue. It is the money a company would earn in a year if its current customers keep paying.
It is mostly used for subscription companies. You take the monthly income and multiply it to get a yearly figure.
This matters because AI companies often share ARR to show growth. It isn't the same as profit, and it isn't money already in the bank.
For example, if customers pay a set amount each month, the company multiplies that by twelve to get its run rate.
On ITG Now, daily AI news stories may quote a company's ARR or run rate when it shares growth news.
Related terms
ValuationFunding roundStartupSaaSFreemium
Questions people ask about ARR
Is ARR the same as profit?
No. ARR is income from regular customers. Profit is what is left after costs.
What is run rate?
Run rate takes recent income and stretches it over a year. It assumes things stay the same, which may not happen.
Can ARR be wrong or too hopeful?
Yes. It counts income that hasn't arrived yet, and customers can leave. Treat it as a rough guide.