The annualised value of recurring subscription revenue under a defined reporting policy. It excludes one-time fees in common usage. It helps a team compare the recurring size of subscriptions on a common annual basis, even when customers are billed on different schedules.
An example
A customer pays S$5,000 a month for an ongoing subscription and S$8,000 once for implementation. The recurring subscription represents S$60,000 ARR; the implementation charge is excluded. ARR does not mean that amount has already been invoiced, collected or recognised as accounting revenue.
What to check
Document how your business treats ramps, usage charges, credits and signed contracts that have not started.
In practice
When reviewing a renewal, compare the recurring amount on the same scope and currency. A fall in ARR caused by removing licences is different from giving a lower price for the same package.