ARR
Also known as: Annual Recurring Revenue, Subscription Revenue
Annual Recurring Revenue — the annualized value of subscription or recurring contract revenue.
Full Definition
ARR is the primary revenue metric for subscription-based healthcare companies (SaMD, digital health platforms, SaaS). It represents the predictable, recurring component of revenue — excluding one-time implementation fees, professional services, or variable usage charges. ARR growth rate is one of the most important metrics for Series A and Series B investors in digital health. Net Revenue Retention (NRR) — ARR growth from existing customers through expansion minus churn — is a key indicator of product-market fit.
Example
A clinical decision support company has 30 health system customers at an average of $80K per year. ARR = $2.4M. With 90% gross revenue retention and 15% expansion from existing customers, Net Revenue Retention = 105% — meaning the existing customer base grows even without new sales.