ARR is the annualized value of all active subscription contracts in a business — the north-star metric for SaaS companies. Unlike revenue recognized on P&L, ARR is a forward-looking snapshot of the contracted recurring revenue stream. It is typically broken into new ARR (from new logos), expansion ARR (upsells/cross-sells), and churn ARR (lost revenue). ARR growth rate and ARR per employee are key benchmarks for SaaS efficiency.