What is the financial term for 12 months of recurring revenue?

The correct term for 12 months of recurring revenue is Annual Recurring Revenue (ARR). This metric is vital for subscription-based businesses as it provides a clear understanding of the business's revenue stream over a year. ARR allows companies to predict their future revenue based on existing subscriptions and helps in financial planning and assessing the company's growth trajectory.

ARR includes all predictable and recurring revenue, excluding non-recurring revenue sources such as one-time fees or project-based work. This distinction is essential as it gives stakeholders a more accurate picture of the business's financial health and sustainability. By focusing on recurring revenue, businesses can evaluate their performance, forecast future growth, and make informed decisions regarding investment and strategy.

In contrast, other terms relate to different concepts. For example, Monthly Recurring Revenue (MRR) pertains to the recurring revenue recognized on a monthly basis, and while important, it does not cover the annual scope that ARR does. Meanwhile, ARPU (Average Revenue Per User) describes revenue generated per subscriber but does not reflect total revenue figures. Expansion Revenue refers to additional income generated from existing customers, such as upsells or cross-sells, which is different from the core metric of recurring revenue over time.