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Why is the calendar year the relevant unit? If you insist on years, then if you consider the year from June to June, $2,138 would be misleading small. The poin
by dcre 1y ago
Why is the calendar year the relevant unit? If you insist on years, then if you consider the year from June to June, $2,138 would be misleading small.
The point of ARR is to give an up to date measure on a rapidly changing number. If you only report projected calendar year revenue, then on January 1 you switch from reporting 2025 annual revenue to 2026 projected revenue, a huge and confusing jump. Why not just report ARR every month? It's basically just a way of reporting monthly revenue — take the number you get and divide it by 12.
I am really skeptical that people are being bamboozled by this in some significant way. Zitron does far more confusing things with numbers in the name of critique.
- LetsGetTechnicl 1y agoBecause that's a part of the generally accepted accounting principles: https://www.rightrev.com/gaap-revenue-vs-arr/ https://www.rightrev.com/gaap-revenue-vs-arr/ Nobody considers a year from June to June because that would be misleading.
- dcre 1y agoThat is an article explaining why ARR is useful and important despite not being the same thing as GAAP revenue.
- mossTechnician 1y agoYou're correct, ARRs can be both misleading and for any 12-month period (I just chose a year to simplify), but the problem is AI companies tend to only release their latest ARR, and only selectively, which I believe is misleading in the opposite direction.