WHAT COUNTS AS ARR?

Summary from the TLDR Founders newsletter

When determining Annual Recurring Revenue (ARR), companies must consider several factors, including the frequency of billing, the source of revenue, the timing of when to start and stop counting a customer, and any adjustments such as discounts or credits. Recurring revenue from usage-based pricing models, such as those used in AI and hybrid SaaS companies, should be included in ARR calculations, even if the predictability of customer usage varies. It's also important to distinguish between product and service-based charges, as they have different margin structures and valuation premiums.