ARR / MRR
Run-rate scale; an input to other metrics.
- Formula
- ARR = MRR x 12; recurring only (excl. one-time/services)
- Unit
- $
- Models
- SaaS, Usage-based, Subscription
No public benchmark exists for this metric yet. This is where Omega Point's proprietary data will fill in.
What it is
ARR (Annual Recurring Revenue) and MRR (Monthly Recurring Revenue) measure the annualized or monthly run-rate of predictable, recurring contract value. Only recurring fees count — one-time setup fees, professional services, and non-recurring charges are excluded. ARR = MRR × 12.
How to calculate it
Sum every active subscription or committed recurring contract. Convert monthly amounts to annual (× 12) or annual to monthly (÷ 12) to get a consistent view. Exclude everything non-recurring: implementation fees, one-time licenses, transactional revenue. For usage-based SaaS, use contracted minimums for the committed portion and trailing actuals for the variable portion, disclosed separately.
Why it matters
ARR/MRR is the foundational scale metric for recurring-revenue businesses. It is the denominator or numerator in almost every other SaaS efficiency ratio — CAC payback, NRR, burn multiple, magic number. Investors and operators use it as the primary measure of a company's run-rate size and the base from which growth is computed. Milestone markers — $1M ARR (initial PMF), $10M (repeatable motion), $100M ("Centaur") — serve as widely recognized stage signals, though they are signposts, not thresholds.
How to read it
There is no public benchmark for what ARR/MRR should be at any given stage; it is a scale metric, not a health metric. A company at $500K ARR is not underperforming one at $5M — they are at different stages. The meaningful question is always the rate of change (YoY or QoQ growth rate) and trajectory relative to the company's own plan and cohort. Compare your ARR to your own targets, your prior periods, and — if available — the median ARR of companies at the same age and funding stage from sources like OpenView, Iconiq, or Bessemer's State of the Cloud reports. Omega Point does not publish an ARR target band because no defensible one exists.