Revenue Run Rate
An extrapolation of recent revenue data to estimate a company's full-year revenue as if current trends continued.
What is Run Rate?
Revenue run rate is the annualization of a company's most recent revenue figure — typically a quarter or a month — to project what full-year revenue would be if current performance continued unchanged. For example, a company generating $25 million in Q4 has an annualized run rate of $100 million ($25M × 4). Run rate is widely used by startups and high-growth companies that lack full-year data, by analysts modeling new businesses mid-year, and in SaaS metrics as Annual Recurring Revenue (ARR). The key limitation is that run rate ignores seasonality, one-time items, and growth trends — a retailer's Q4 run rate vastly overstates their annual pace. Run rate is most reliable for businesses with predictable, recurring revenue streams.
Example
A SaaS startup closes December with $2.1 million in Monthly Recurring Revenue (MRR), up from $1.4 million six months earlier. Its ARR (annual run rate) = $2.1M × 12 = $25.2 million. Investors use this ARR figure to benchmark the company against publicly traded SaaS peers (which often trade at 8–15x ARR), estimating a potential valuation of $200–380 million — even though the company has never reported a full fiscal year of revenue.
Source: Investopedia — Revenue Run Rate