Lets say you work at a startup that is growing insanely fast and you want to report financial metrics to investors, media etc. You can't use annual recurring revenue because 2026 is not over yet, and your company is so young it doesn't make sense to look back to last year. You can't use YoY because it would be some obscene figure (100000%) that definitely won't hold.

So the two best metrics are annualized recurring revenue (take last month * 12 or last 4 weeks * 13) and QoQ growth %.

There are two caveats:

- If the revenue is high quality (e.g. annual enterprise contracts, good NRR), then last 4 weeks * 13 is actually a conservative estimate as your company will likely continue to grow.

- But if the revenue is more volatile (e.g. consumption, token usage, bad NRR) then annualized recurring revenue can be used to hide worse performance because companies will juice revenue one month and report high "ARR"

I see but it's still predicted annual revenue. I can understand people not liking the word 'predicted' here because it is more grounding but that's what it is in the end? I guess i understand it now. thanks.

There’s a bunch of fuzzy metrics here, which is one reason I turned it back into a monthly number. The other issue (as you’ll see on the chart) is that Anthropic and openAI are recognising revenue in completely different ways.

Usually startups like to talk about Adjusted Annual Revenue in fundraising and other hype materials. There’s no regulation around this metric so whatever their investors are willing to accept is what they use. One way to measure it is to take the past 4 weeks revenue and multiply by 13.

Because that's 364 days.