Core Revenue Metrics Outcome

ARR (Annual Recurring Revenue)

ARR (Annual Recurring Revenue): The annualized value of recurring revenue. ARR represents the yearly run rate of subscription revenue.

Also known as: ARR

Formula

ARR = MRR × 12

ARR-O = MRR × 12

ARR-M = MRR × 12

ARR-M = ARR-O + Pricing_Adjustment_MRR × 12 + Recontracting_MRR × 12

What It Tells You

The scale of the business on an annual basis. Used for valuation, planning, and investor reporting.

Common Mistakes

Calculating from annual contracts directly without normalizing (leads to timing mismatches)
Treating ARR as cash (it's a run rate, not collected revenue)
Mixing definitions without declaring which one you're using

Dual-Lens: Operating / Market Forms

This metric has two governed forms derived from the same Commercial Event Ledger using Attribution Taxonomy Layer tags.

Operating Form: ARR-O

ARR-O measures organic recurring revenue by excluding MRR changes that come from mechanical pricing or contract restructuring rather than genuine customer expansion.

CEL Source:: `Revenue_Event`, `Amendment_Event`
ATL Inclusion:: All `expansion_classification` values **except** `Pricing_Adjustment` and `Recontracting`

ARR-O = MRR × 12

What it tells you: The run rate of revenue driven by real customer adoption and organic expansion — the durable portion of ARR.

Market Form: ARR-M

ARR-M is total reported ARR including all sources of recurring revenue change. This is the number investors see and public comparables use.

CEL Source:: `Revenue_Event`, `Amendment_Event`
ATL Inclusion:: All `expansion_classification` values included

ARR-M = MRR × 12

What it tells you: The scale of the business as reported to the market. The number used in valuation multiples and investor benchmarks.

Bridge

ARR-M = ARR-O + Pricing_Adjustment_MRR × 12 + Recontracting_MRR × 12

The delta (ARR-M − ARR-O) is the **Durability Gap** — how much of reported ARR growth comes from mechanical pricing and contract changes rather than organic customer expansion. A growing gap signals ARR growth that may not be durable. Tracked implicitly by KeyBanc in their annual SaaS survey; public SaaS companies report total ARR (ARR-M) while internal planning teams strip pricing actions to assess true product-led growth. ---

Related Metrics

Connected in the GASP relationship graph.

Upstream — what drives this

New MRR drives ARR (Core)
Expansion MRR drives ARR (Core)
Churned MRR reduces ARR (Core)

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Sources

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GASP Standard v1 · Last updated 2026-02-20