Glossary > Revenue Run Rate
Revenue Run Rate
Revenue run rate is a financial metric used to estimate a company’s future revenue based on its current performance. The revenue run rate is calculated by multiplying the current monthly revenue by 12 to estimate the annual revenue. For example, if a company has a monthly revenue of $100,000, its revenue run rate would be $100,000 x 12 = $1,200,000.
In the software-as-a-service (SaaS) industry, revenue run rate is an important metric used to predict future growth and assess the potential of a company. SaaS companies typically have a recurring revenue model, where customers pay a subscription fee on a recurring basis, allowing for more predictable revenue streams and making revenue run rate a useful metric.
The revenue run rate helps SaaS companies and investors understand the potential size of the market, forecast future revenue, and make informed business decisions. However, it’s important to keep in mind that revenue run rate is an estimate and can be influenced by factors such as changes in customer churn, changes in pricing, and fluctuations in market demand.
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