Defining ARR is getting harder—not easier—as SaaS, AI, usage-based pricing, and hybrid business models evolve. In episode #345 of SaaS Metrics School, Ben Murray breaks down the five critical questions every ARR definition must answer to hold up with Boards, investors, and during due diligence.
Drawing on extensive research into how public tech companies disclose ARR in press releases and SEC filings, Ben explains why ARR is not “dead” but why vague or inconsistent ARR definitions undermine credibility, comparability, and company valuation. This episode provides a practical framework to help SaaS leaders, CFOs, and founders clearly define ARR in a way that supports accurate metrics, financial modeling, and investor trust.
Blog post on ARR definitions and disclosure best practices: https://www.thesaascfo.com/cfos-guide-to-disclosing-headline-arr-numbers/Ben's SaaS Metrics training: https://www.thesaasacademy.com/the-saas-metrics-foundationThe five questions every ARR definition must answer to be investor-readyWhich revenue types belong in ARR—and which should be excludedThe difference between revenue-based, contract-based, and hybrid ARR calculationsHow public SaaS and AI companies annualize subscription and usage-based revenueCommon approaches for handling variable, consumption, and usage revenue in ARRWhy vague ARR definitions create confusion in fundraising and due diligenceClear ARR definitions improve credibility with investors and business leadersPoorly defined ARR can negatively impact company valuationConsistent ARR logic enables better KPI tracking and benchmarkingTransparent ARR disclosures reduce friction during fundraising and M&AAccurate ARR supports stronger financial strategy and forecastingWell-defined revenue categories improve accounting and financial systems