Annual recurring revenue (ARR) is a metric used in software-as-a-service, managed services, and subscription businesses, representing the annualised value of recurring revenue contracts in force at a point in time. ARR is the primary valuation reference metric for SaaS and MSP transactions, with multiples typically expressed as EV/ARR rather than EV/EBITDA at smaller scale.
ARR multiples for Australian sub-$20M SaaS businesses in 2026 typically range from 1.5x to 6x ARR depending on growth rate, gross retention, gross margin, and customer concentration. The metric requires careful definition: not all “recurring” revenue is durable, and one-off implementation, training, or professional services revenue should be excluded.