---
title: ARR Growth Rate Explained & Why It's Important | Jirav
description: ARR Growth Rate is the period-over-period increase in a SaaS company's ARR. ARR is the amount of revenue a company expects to receive each year.
---

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# [ARR Growth Rate Explained & Why It's Important | Jirav](https://www.jirav.com/saas-metrics-library/annual-recurring-revenue-growth-percentage)

 Written by [Jirav](https://www.jirav.com/saas-metrics-library/author/jirav) | Apr 25, 2023 2:51:32 PM

### What is ARR Growth %?

ARR Growth % is the period-over-period percentage increase in a SaaS company's ARR. ARR is the amount of revenue a company expects to receive each year from its customers.

### Why ARR Growth % Is Important

ARR Growth % is a critical metric for SaaS companies, because it indicates the company's overall health and performance. It shows how fast the company is growing, and it can be used to compare a company's performance to that of its competitors. A high ARR Growth % is usually a sign of a healthy company with a strong product and a growing customer base. It also indicates that the company is well-positioned to continue growing in the future.

Investors and stakeholders in SaaS companies often use ARR Growth % to assess the company's value and potential for future growth. It's a key metric that venture capitalists, private equity firms, and other investors consider when deciding whether to invest in a company. A high ARR Growth % can help a company secure funding and increase its valuation.

### How to Calculate ARR Growth %

ARR Growth % is calculated using the following formula:

ARR Growth % = (Current ARR - Previous ARR) / Previous ARR x 100

For example, let's say a SaaS company had an ARR of $10 million in the previous year, and in the current year, it has an ARR of $15 million. To calculate the ARR Growth %, we would use the following formula:

ARR Growth % = ($15MM - $10MM) / $10MM x 100 = 50%

So in this example, the ARR Growth % would be 50%.

[View full post](https://www.jirav.com/saas-metrics-library/annual-recurring-revenue-growth-percentage)

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