ARR is the total amount of revenue a company can expect to receive on an annual basis from recurring sources.

Annual Recurring Revenue (ARR) is a metric used in product management to measure the amount of revenue that a company can expect to receive on an annual basis from its existing customers. It is calculated by taking the total amount of revenue generated from customers over a 12-month period and dividing it by the total number of customers. ARR is an important metric for product managers because it provides insight into the health of their product and customer base. It can be used to track customer retention, identify areas for improvement, and measure the success of marketing campaigns. Additionally, ARR can be used to forecast future revenue and inform pricing decisions.

Example: A company sells a subscription-based software product for $100 per month. The company has 1,000 customers paying for the product each month. This means that the company has an annual recurring revenue (ARR) of $100,000 ($100 x 1,000 customers x 12 months).