Fig. 01 · Glossary
ARR and MRR
Also known as Annual Recurring Revenue, Monthly Recurring Revenue, Recurring Revenue
Definition
ARR and MRR are recurring-revenue measures used to separate durable subscription economics from one-time services, resale, setup fees, and usage spikes. ARR annualizes the recurring base; MRR expresses the same base monthly. In diligence, the key question is not the label but the rules: what is included, what churns, what expands, what is usage-dependent, and what is actually contracted.
The fastest way to lose buyer trust is to call every repeatable dollar ARR. Managed services, pass-through resale, implementation retainers, and consumption revenue can be valuable, but they do not carry the same multiple unless the contract terms, renewal behavior, margin profile, and expansion path support it.
For operators, ARR/MRR definitions should be written before a board pack or data room exists. If finance, sales, and customer success use different recurring-revenue rules, the company is not ready for serious diligence.
Human Renaissance glossary · operator-grade definitions · Research methodology
