Recurring revenue is revenue that is likely to continue to be generated regularly for a significant period of time

It is typically used by companies that sell subscriptions or services. It could take the form of bills paid monthly by consumers, or commercial contracts lasting several years.

An example of this is monthly phone contracts. Unless the contract is broken or the customer does not pay, the phone business is guaranteed monthly revenue for the duration of the contract, often 2 years.

Recurring revenue is often tracked on either a monthly basis, as monthly recurring revenue (MRR), or an annual basis, as annual recurring revenue (ARR).

This number excludes all one-time, non-recurring payments; for instance, implementation or professional service fees, hardware, and discounts.

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