SaaSpedia

the encyclopedia of

subscription & SaaS finance terms and metrics

ARR

Annual Recurring Revenue

There can be significant confusion over the term ARR, its use and the measurement of ARR because it feels and sounds like a measure of “revenue” in the context of revenue recognition. However, ARR is not necessarily a measure of recognized revenue.

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MRR

Monthly Recurring Revenue

MRR is an acronym for Monthly Recurring Revenue or, very simply, a measure of your predictable revenue stream. The primary purpose of MRR is to permit performance reporting across dissimilar subscriptions terms.

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CLV

Customer Lifetime Value

Customer lifetime value, also referred to as LTV and CLV, is the estimate of the projection of gross margin contribution per customer over the life of the average customer.

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CHURN

Measuring Losses

While there are many variations of churn, churn is always a measure of attrition or loss, and it can be lost customers, contracts, MRR, GAAP revenue, contract value or bookings.

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RENEWAL RATE

Measuring Retention

Renewal rate is a measure of retention. Renewal rate is expressed as a percentage and can mean different things to different people.

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REVENUE

Recognizing Revenue

Revenue Recognition is an accounting principle and a process for reporting revenues by recognizing the monetary value of a transaction or contract over a period of time as the revenue is “earned.”

FINANCIAL TERMS

Financial Terms

You manage cash flow, but "finance" is left to the accountant that prepares your taxes. If this is you, read on and be sure to watch the essential finance concepts video.

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