@Subs I am sure @madamswer
will respond eloquently as always though I have to take you up on the point below
We know that management has stated that they are trying to push more of the contract value into recurring revenue. Why would they do this if it is so "up in the air"? Because it isnt.
They want to do it because ARR (recurring revenue) is valued higher than one-time revenue. Consulting/development revenue is usually valued at 1-1.5 times and ARR 3-10 times.
But it should also be noted that recurring revenue isnt solely based on "subscriptions".
Yes and isn't that madamswer's point? The example you give is a license model which can be perpetual or term. If perpetual then it is not ARR as the client can elect to keep using un-maintained software at the end of the term without ALC getting any more revenue.
The purpose of ARR/multiples is a short cut to estimating future cashflows of the business. What is wrong with trying to approach it another way as well. Personally I like ARR/multiples though recognise its limitations.
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