Revenue run rate is an annualized revenue estimate based on current performance, calculated by multiplying your most recent month of revenue by 12, or your latest quarter by 4. It gives you a forward-looking annual revenue figure when you do not yet have a full year of history. Run rate differs from ARR in that it can include non-recurring revenue, which makes it potentially misleading if one-time items are folded in without saying so.
Run rate gives you a forward-looking annual revenue estimate based on current performance, which is useful when you do not have a full year of data yet. Early-stage companies commonly use it to frame revenue at an annual scale, for instance describing $50,000 in MRR as a $600,000 run rate.
ARR is based on committed, recurring revenue from subscriptions. Run rate can include one-time revenue as well, which makes it potentially misleading if you do not separate the two clearly.
If your revenue is purely recurring, run rate and ARR are the same number. If you have meaningful one-time components, such as implementation or services fees, ARR is the cleaner metric to lead with.
Say March MRR comes in at $85,000. The revenue run rate is $85,000 multiplied by 12, or $1.02 million. Now say Q1 total revenue was $240,000, including $15,000 in one-time services revenue. The run rate is $240,000 multiplied by 4, or $960,000, but the ARR, counting only recurring revenue, is $225,000 multiplied by 4, or $900,000.
Using your single best month to calculate run rate overstates the business if revenue is volatile; a trailing average is more honest in that case. Including one-time revenue in a run rate figure and calling it ARR is a mistake investors catch quickly, and projecting run rate as if current growth is guaranteed to continue ignores that run rate assumes only that today's performance holds steady.
On your traction slide, lead with ARR whenever your revenue is purely recurring, and use run rate only when ARR genuinely does not apply, such as very early in a company's life. Whichever metric you use, be explicit about which one it is.
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