Recurring Revenue

The annualised value of recurring subscription revenue. ARR is the primary top-line metric for SaaS and subscription businesses, providing a normalised view of predictable revenue that strips out one-time fees and variable charges.

The total predictable revenue a subscription business earns each month, normalised to exclude one-time charges. MRR is tracked as new MRR, expansion MRR, contraction MRR, and churned MRR to understand the drivers of revenue movement.

The percentage of recurring revenue retained from existing customers over a period, including expansion revenue from upsells and cross-sells. NRR above 100% indicates that growth from existing customers outpaces losses from churn, a hallmark of strong product-market fit.

A valuation multiple calculated by dividing enterprise value by revenue, used to value businesses where profitability is not yet meaningful — such as early-stage companies, high-growth SaaS businesses, and pre-profit biotech firms. EV/Revenue is less susceptible to manipulation through accounting choices than earnings-based multiples but provides less insight into operating efficiency.

Income received by a company for goods or services that have not yet been delivered or performed, recorded as a liability on the balance sheet. In SaaS and subscription businesses, deferred revenue is a key indicator of future recognised revenue and contract backlog strength.

The framework through which an organisation creates, delivers, and captures value. A business model defines the logic of how a company generates revenue, serves customers, and sustains competitive advantage.

Contracts that grant permission to use intellectual property (patents, trademarks, software, content) in exchange for fees or royalties. Licensing is both a monetisation strategy for IP owners and an intangible asset for licensees who gain access to proprietary technology or brand rights.

A structured finance technique in which a company's future revenue streams are packaged into a financial instrument that can be sold to investors or used as collateral for lending. In the context of intangible asset finance, revenue securitisation allows businesses to monetise predictable revenue generated by their intangible assets — software subscription income, licensing fees, franchise royalties, data access fees — without selling the underlying assets or diluting equity.

SaaS Intangible Assets: ARR, Churn, and Customer Value

SaaS businesses generate value through intangible assets that compound over time — customer relationships measured by ARR and retention, technology platforms that scale without proportional cost, and data assets that improve with usage. Understanding the intangible asset composition of a SaaS business changes how you value it.

What is customer relationship value and how is it measured?

Customer relationship value is the profit generated by customer relationships over their lifetime. It's measured via LTV (lifetime value) and is often the largest intangible asset for recurring revenue businesses.

What is Net Revenue Retention (NRR)?

NRR measures the revenue retained from a cohort of customers plus expansion revenue (upsells, cross-sells) minus churn, expressing it as a percentage of starting revenue.

How is the Rule of 40 calculated and when does it apply?

The Rule of 40 states that a healthy SaaS company's revenue growth rate plus profit margin should exceed 40% — it applies primarily to SaaS companies at scale and is used by investors to assess growth-profitability balance.