---
title: "Run-rate ARR far above the last 12 months' revenue"
url: https://firstpassmemo.com/flags/arr-far-above-trailing-revenue/
updated: 2026-10-07
publisher: FirstPass Memo (hello@firstpassmemo.com)
---

Red flag explained · Numbers that disagree

# Run-rate ARR far above the last 12 months' revenue

Short answer: When ARR is more than one and a half times the revenue the business actually collected over the last 12 months, either growth is very recent or the run-rate is optimistic. Both deserve evidence. Ask for monthly revenue for the last 12 months so you can see the ramp yourself.

Updated 7 October 2026 · Checker rule ARR_VS_TTM

## When the checker raises it

Raised as medium severity when stated ARR is more than 1.5 times trailing 12-month revenue.

## Why it matters

A price set on ARR pays for a year that has not happened yet. If the growth is real, that may be fair. If ARR is one good month times 12, you are paying for a peak.

Our Acquire.com guide gives an illustration: a listing showing $30,000 of ARR next to $16,000 of trailing revenue is claiming nearly twice what it collected.

## A worked example

Composite example, not a real listing

SaaS tool for restaurant menu updates Asking price: $75,000 ARR: $42,000 TTM revenue: $24,000 Annual profit: $18,000 Revenue verified via Stripe Churn: 4% monthly Business age: 2 years Owner hours: 5 hours per week

Traffic or revenue sources typed in: Organic search 20%, Direct 40%, Referral 40%.

What the red-flag checker (https://firstpassmemo.com/checker/) returns: payback of 50 months on annual profit ÷ 12, and this flag:

Medium Run-rate ARR far above the last 12 months' revenue

ARR $42,000 against trailing revenue $24,000. Either growth is very recent or the run-rate is optimistic.

Ask: Can you share 12 months of monthly revenue so the ramp is visible?

The same example also raises: Concentration not disclosed (https://firstpassmemo.com/flags/concentration-not-disclosed/).

## What to check

- Ask for monthly revenue for the last 12 months.

- Ask what drove the growth, and whether it came from one customer or one channel.

- Work out payback on trailing profit as well as on the run-rate.

## Questions to send the seller

- Can you share 12 months of monthly revenue so the ramp is visible?

- Is the stated ARR a run-rate or contracted revenue, and which figure is current?

- Can you share 12 months of monthly revenue so the ramp to the current run-rate is visible?

## Related flags

- ARR and MRR disagree (https://firstpassmemo.com/flags/arr-and-mrr-disagree/)

- Multiple above the typical range (https://firstpassmemo.com/flags/asking-multiple-above-typical-range/)

- All red flags explained (https://firstpassmemo.com/flags/)

## Useful next

- Acquire.com listing red flags (https://firstpassmemo.com/guides/acquire-listing-red-flags)

- Free red-flag checker (https://firstpassmemo.com/checker/): paste a listing and see which flags it raises.

The checker is a set of plain rules, not an AI model, and its flags are prompts for questions, not verdicts. Composite examples are invented. Informational screening only, not investment, legal or tax advice.

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FirstPass Memo is informational screening, not investment, legal, tax, accounting or valuation advice, and not an audit. Seller figures are not independently verified. HTML version: https://firstpassmemo.com/flags/arr-far-above-trailing-revenue/