Recurring Revenue Models

Many software companies sell subscriptions instead of one-time licenses. Revenue that repeats every month or year is more predictable and more valuable. Here is how subscription businesses work and the metrics investors track.

Why recurring revenue is prized

A company that sells a product once has to find new buyers every year. A subscription company starts each year with most of its revenue already locked in from existing customers. That predictability lets it invest confidently, and investors pay more for each dollar of it.

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