Hi Everyone,
I’ve been looking over the last several years of AXON’s results, and I am puzzling over the reason why AXON’s annual recurring revenue is much larger than the quarterly revenue.
I’ve read that sometimes companies book all of the ARR revenue as soon as it is ordered, but I would like like to see what you AXON shareholders have learned.
Why is AXON’s ARR so much larger than their quarterly revenue?
Thanks.
Best,
bulwnkl
ARR is an annual measure. Quarterly revenues would be closer to 1/4 of ARR but that’s not exact either. However, the main point is ARR should always be much larger than quarterly revenues.
AJ
AJ,
Thanks, and that’s what I thought. When I look at AXON, I have $1366M for trailing twelve month revenue, and ARR is $559M.
When I look at Samsara I get $729M for trailing revenue, but $930M for ARR, so that number through me for a bit of a loop, and makes me think that I don’t understand ARR as well as I thought I did.
Why would ARR for Samsara be more than TTM revenue?
Best,
Brian (bulwnkl)
ARR can be larger than TTM revenues as it includes new bookings. Sometimes those new bookings can take some time to turn into recognizable revenue. I’m not sure of the lag specific to Samsara, but new bookings likely explains the difference.
AJ
Here’s a simplistic way of looking about it. Say the last four quarters revenue were $1m, $2m, $3m and $4m. TTM rev is $10 million. ARR is 4x the last quarter in a pure recurring revenue company, or $16m.
Saul
Blockquote
ARR is an annual measure. Quarterly revenues would be closer to 1/4 of ARR but that’s not exact either. However, the main point is ARR should always be much larger than quarterly revenues
I looked around on line for formalized definitions. Several sites seem to agree on this:
Monthly recurring revenue (MRR) is a metric for subscription business revenue. It is calculated by:
MRR = Average monthly revenue per subscriber * number of subscribers
It includes subscription revenue for the month in question, but excludes one time events that would be captured by “total revenue”.
ARR is merely 12 times the last month MRR. So in a growing business, the recent month’s subscription revenue * 12 will be larger that total TTM revenue.
Saul and ibuildthings,
Thanks for the clarification. Much appreciated.
Brian
I would think that the fact that not all of Axon’s revenue is from subscription software but rather from things such as Tasers, the ARR would be lower, as that is not recurring?