Run Rate

Run Rate takes a single period’s revenue (often the most recent month or quarter) and multiplies it out to a full year. It’s fast to compute and just as fast to mislead: the math silently assumes the current period repeats twelve times over, with no seasonality, no one-off spike, and no deal that won’t recur.

A run rate calculated on unreconciled or partial-period data compounds the problem, since the error gets multiplied along with the revenue. Compare it to Annual Recurring Revenue, which is built from actual recurring contracts rather than a single snapshot.