ARR is the total contracted revenue that your company expects to receive every year from active recurring revenue agreements (typically subscriptions or long-term service contracts). Unlike Total Revenue, which is based on what is recognized in a given year (per accrual rules), ARR represents the run-rate of predictable, renewable revenue from all current customers.

MRR is the total recurring revenue generated each month from active subscriptions, excluding one-time fees, usage-based charges, and non-recurring items. MRR answers "How much predictable, recurring revenue are we earning this month?" This is a moment-in-time metric that helps track revenue health, growth pacing, and retention.

Bookings represent the total value of customer contracts signed during a specific time period (usually monthly or quarterly), regardless of when the revenue is recognized. Bookings answer "How much revenue did we contract this month/quarter — regardless of when it will be earned?" This includes new customer contracts, renewals, and expansions that create contractual commitments.

Deferred Revenue (also called unearned revenue) is the portion of cash already collected from customers for services you haven't delivered yet — and therefore can't recognize as revenue yet under accrual accounting. It sits on the balance sheet as a liability, not revenue. It becomes earned revenue over time as the service is delivered.

Gross Margin measures the percentage of revenue that remains after subtracting direct costs required to deliver your product or service — also known as Cost of Goods Sold (COGS). It answers "How profitable is our business before overhead?" It's a key indicator of unit economics and scalability.

EBITDA Margin measures a company's operating profitability as a percentage of total revenue, before interest, taxes, depreciation, and amortization expenses. It answers "How much of our revenue turns into operating profit (or loss), before accounting for financing and tax structure?" This is a clean view of operating efficiency and financial sustainability.

Burn Multiple measures how much cash you burn for every dollar of net new ARR you generate in a given period. It answers "How much are we spending to grow?" Burn Multiple is a key KPI for assessing capital efficiency, growth-stage sustainability, fundraising readiness, and operational discipline.

The Rule of 40 is a composite metric that combines a company's revenue growth rate and profitability margin (usually EBITDA or operating margin). The sum of these two should be at least 40% to indicate financially healthy, efficient growth. It answers "Are we growing fast enough to justify how much we're burning (or earning)?"

Operating Expense Ratio measures the percentage of revenue spent on operating expenses (OpEx), including sales & marketing, R&D, general & administrative (G&A), and other overhead costs. It answers "What portion of our revenue are we spending to run the business?" The goal over time: grow revenue faster than expenses, improving margins and cash flow.

GRR measures the percentage of recurring revenue retained from existing customers over a given period (typically 12 months), excluding any revenue from upsells, expansions, or new customers. It focuses purely on retention health — how much base revenue you kept, despite churn or contraction. It answers "If we did nothing to grow accounts, how much recurring revenue would we keep from existing customers?"

Gross Account Retention (GAR) measures the percentage of customers (accounts) you retain over a given time period, excluding any upsell, expansion, or new customers. It answers "How many of our existing customers stayed with us — regardless of how much they spent?" This metric treats all customers equally (logos), regardless of revenue size.