Recurring revenue

Revenue expected to repeat through subscriptions, renewals or continuing customer relationships. Recurrence can improve predictability, but does not guarantee renewal, collection or a valuation premium.

Recurring revenue in round numbers

Hypothetical annual US$ millions: a business records 88 of product sales and 12 of service revenue, for total revenue of 100. Of that year’s service revenue, 7.2 was earned under recurring service contracts: 60% of service revenue and 7.2% of total revenue.

These are historical revenue shares, not a forecast of next year’s cash. Product orders may repeat, while service contracts can have renewal, cancellation and delivery conditions.

  • subscriptions
  • contracts
  • maintenance

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