ARR vs MRR: what is the difference?
ARR and MRR are two views of the same thing: predictable recurring revenue. The only real difference is the time window and, therefore, the audience and the cadence of decisions each one supports.
Choosing which to lead with depends on your billing motion. High-velocity monthly businesses live in MRR; annual-contract enterprise businesses live in ARR.
Short answer
ARR and MRR measure the same recurring revenue over different windows. MRR is monthly recurring revenue; ARR is its annualized value, generally MRR times 12. Monthly-billed and SMB businesses lead with MRR for operating cadence, while annual-contract and enterprise businesses lead with ARR for planning and board reporting.
Key takeaways
- MRR is monthly, ARR is annual; ARR is generally MRR times 12.
- Both count only recurring revenue, excluding one-time fees.
- MRR fits monthly-billed, SMB, and self-serve motions.
- ARR fits annual-contract, enterprise planning and board decks.
When to use each
Use MRR when you bill monthly and want a fast operating pulse, because month-to-month movement is where you catch problems early. Use ARR when contracts are annual or multi-year and you are planning, fundraising, or reporting to a board that thinks in annual run-rate.
Most companies track both. The danger is mixing them: quoting ARR growth while operating on MRR churn creates confusion. Keep the definitions consistent and reconcile them (ARR should equal MRR times 12).
How Ardovo handles it
Ardovo shows MRR and ARR from one revenue source so the two never drift apart. Rook can present either view and reconcile them instantly, so a board deck and the daily operating dashboard tell the same story.
Frequently asked questions
Is ARR just MRR times 12?
Generally yes. ARR annualizes your current recurring run-rate, so ARR equals MRR times 12. They can diverge if one-time items leak into a recurring calculation, which signals a data hygiene problem.
Should I use ARR or MRR?
Use MRR for monthly-billed, SMB, and self-serve businesses that need a fast operating pulse. Use ARR for annual-contract and enterprise motions and for board or investor reporting. Many teams track both.
Do ARR and MRR include one-time fees?
No. Both count only recurring subscription revenue. Implementation fees, services, and one-off charges are excluded because they do not repeat.