Technology & Software
ARR, NRR, Rule of 40, CAC/LTV, margin profiles, and stock-based compensation as real cost
CrowdStrike ended fiscal year 2025 (January 31, 2025) with $4.24 billion in annual recurring revenue, growing 23% year-over-year. Its dollar-based net retention rate was 112%.
These two numbers — ARR and NRR — told you more about the company's trajectory than any traditional income statement metric. ARR showed the size of the revenue engine. NRR showed that existing customers were spending 12% more each year without CrowdStrike acquiring a single new account.
For a SaaS investor, these are the vital signs. For a traditional analyst trained on GAAP revenue, they're invisible. This lesson teaches you to read software companies the way the market actually prices them.
Annual Recurring Revenue (ARR) is the North Star metric for subscription software. Unlike GAAP revenue — which can include one-time services, professional fees, or hardware — ARR counts only the predictable, repeating subscription stream.
That is the opening. Finishing a lesson is where it stops being interesting and starts being useful: the full lesson runs to 6 sections and ends with 5 practice questions. A free account is what opens the rest, and the other 255 lessons in the Academy with it. No card.
What this lesson covers
- 1ARR: the recurring revenue engine
- 2NRR: growth without acquisition
- 3Snowflake FY2025: the NRR compounding machine
- 4The Rule of 40: growth + margin = quality
- 5CAC/LTV: the unit economics equation
- 6Software margin profiles by maturity stage