Recurring Revenue
Recurring Revenue · Subscription Revenue
The portion of revenue that repeats on a regular basis — typically from subscriptions or long-term contracts.
What it is
Recurring Revenue is revenue the company generates repeatedly without having to "re-sell" each time. The customer has paid a subscription and income arrives automatically month after month.
The opposite is one-time (transactional) revenue — the customer must actively purchase again each time.
The SaaS model (Software as a Service) is built entirely on recurring revenue — Microsoft 365, Salesforce, Adobe.
Why track it
High share of recurring revenue → predictable, stable cash flow → lower risk → higher valuation. This is why SaaS companies traditionally trade at higher P/E multiples than transactional businesses.
Monitor ARR (Annual Recurring Revenue) and its trend as a leading indicator of future revenues.
Real-world example
Microsoft: ~80% of revenues come from contractual and subscription income. During the 2008–2009 recession revenues declined only 5% — a direct consequence of the high recurring revenue share.