How is ARR different from ARR run rate or pipeline ARR?

How is ARR different from ARR run rate or pipeline ARR?

• A. ARR run rate is the annualized value; ARR is a projection.
• B. ARR is current annualized recurring revenue; run rate is a projection based on current performance; pipeline ARR is potential ARR from opportunities not yet closed.
• C. ARR run rate is the same as ARR.
• D. Pipeline ARR is the actual ARR.

Answer: (B)

ARR represents the value of recurring revenue that is already contracted and billed on an annual basis. If you have a certain amount of monthly recurring revenue, you convert that to an annual figure to get ARR (for example, 40k MRR translates to 480k ARR). ARR run rate is a projection based on current performance. It takes the existing pace of revenue and projects it forward for a full year, assuming things stay roughly the same. It’s an estimate, not a guaranteed figure, because churn, upsells, renewals, and other changes can alter the actual outcome. Pipeline ARR is the potential ARR from opportunities that haven’t closed yet. It’s the forecasted value of deals in your sales funnel, annualized, but not actual ARR until those deals close and become contracted. So ARR = current contracted annualized revenue; ARR run rate = projection from current performance; pipeline ARR = potential revenue from opportunities not yet closed.

ARR represents the value of recurring revenue that is already contracted and billed on an annual basis. If you have a certain amount of monthly recurring revenue, you convert that to an annual figure to get ARR (for example, 40k MRR translates to 480k ARR).

ARR run rate is a projection based on current performance. It takes the existing pace of revenue and projects it forward for a full year, assuming things stay roughly the same. It’s an estimate, not a guaranteed figure, because churn, upsells, renewals, and other changes can alter the actual outcome.

Pipeline ARR is the potential ARR from opportunities that haven’t closed yet. It’s the forecasted value of deals in your sales funnel, annualized, but not actual ARR until those deals close and become contracted.

So ARR = current contracted annualized revenue; ARR run rate = projection from current performance; pipeline ARR = potential revenue from opportunities not yet closed.