Revenue Run Rate
A Revenue Run Rate is a financial metric used to estimate the company’s future revenue based on current financial performance. It extrapolates the current period’s revenue (typically monthly or quarterly) over a longer timeframe (usually a year) to project annualized revenue figures.
Formula: Revenue Run Rate = Revenue in Period × Number of Periods in a Year For example, if a company earns AED 500,000 in a month, its annual run rate would be AED 500,000 × 12 = AED 6,000,000. Run rates are particularly useful for:
Fast-growing startups lacking extensive historical data.
SaaS businesses with recurring revenue models.
Evaluating growth momentum during early fundraising rounds.
However, it’s important to note that run rates can overstate revenue if they ignore seasonality, churn, or one-time transactions.