Which financial metric measures the average revenue generated per user?

The correct choice measures the average revenue generated per user and is often highlighted in various discussions surrounding subscription-based businesses. This metric, known as Average Revenue Per User (ARPU), provides valuable insight into the revenue-generating efficiency of a company regarding its customer base.

By utilizing ARPU, businesses can better understand how much revenue they are bringing in from each individual customer, which can guide decision-making around pricing strategies, marketing efforts, and product development. It also aids in comparative analysis with competitors within the same industry, revealing areas where a business might be excelling or lagging in terms of monetization of their user base.

In contrast, the other metrics, while important, serve different purposes: Monthly Recurring Revenue (MRR) measures total recurring revenue from subscriptions within a month; Annual Recurring Revenue (ARR) provides a yearly view of recurring revenue; and Gross Margin assesses the profitability of a company by calculating how much money is made after accounting for the costs of goods sold. Each of these metrics contributes to a broader understanding of a company's financial health, but they do not specifically encapsulate revenue generation on a per-user basis.