Breakdown
How it works
Run-rate = year-to-date ÷ periods elapsed × periods in the year. The exit run-rate annualises only the latest period and is what growth investors quote (ARR). Neither handles seasonality; apply last year's phasing for seasonal businesses.
Formula
Full-year run-rate = YTD ÷ elapsed × total periods
Exit run-rate = latest period × total periods
Required per remaining period = (budget − YTD) ÷ remaining periods
Worked example
850k after 5 months: run-rate 2.04m vs 2m budget (+2%); exit run-rate 2.28m; need 164k a month to hit budget.
Frequently asked questions
When is run-rate misleading?
Seasonal businesses (retail Q4, hospitality summer/Ramadan), lumpy contract revenue, and when the latest month includes a one-off.
Run-rate vs forecast?
Run-rate is mechanical; a forecast adds known changes — new contracts, price rises, headcount plans. Use run-rate as the baseline, forecast as the answer.
What is ARR?
Annual recurring revenue = latest month's recurring revenue × 12; excludes one-off fees and services.