Recurring revenue is the portion of revenue that is expected to be ongoing and renew for a defined temporal period of a year (Annual Recurring Revenue/ ARR) or month (Monthly Recurring Revenue/ MRR).

The form of recurring revenue that is appropriate to reference should be determined on the basis of the billing associated with that revenue. Determination of churn in customers on a monthly basis isn’t possible to determine when software is billed yearly. See: Pricing

The amount of recurring revenue changes from one period to the next such that:

• Period 2 End ARR =

  • Period 1 End ARR (same as Period 2 Beginning ARR) +
  • ARR Added from New Customers in Period 2 +
  • ARR Grown from Period 1 Customers in Period 2 -
  • ARR Shrunk from Period 1 Customers in Period 2 -
  • ARR Lost from Period 1 Customers in Period 2

• Net ARR Period 2 =

  • Period 2 End ARR -
  • Period 1 End ARR (same as Period 2 Beginning ARR)
  • =
  • ARR Added from New Customers in Period 2 +
  • ARR Grown from Period 1 Customers in Period 2 -
  • ARR Shrunk from Period 1 Customers in Period 2 -
  • ARR Lost from Period 1 Customers in Period 2

  The Net ARR is the net change from one period to the next accounting for new ARR, lost ARR, grown ARR, and shrunk ARR.