{
  "id": 46290,
  "date": "2021-08-25T12:46:20",
  "date_gmt": "2021-08-25T16:46:20",
  "guid": { "rendered": "https:\/\/finance-able.com\/?p=46290" },
  "modified": "2025-12-21T16:52:04",
  "modified_gmt": "2025-12-21T21:52:04",
  "slug": "revenue-run-rate",
  "status": "publish",
  "type": "post",
  "link": "https:\/\/finance-able.com\/revenue-run-rate\/",
  "title": {
    "rendered": "What is a Revenue Run Rate? \u2013 The Ultimate Guide"
  },
  "content": {
    "rendered": "\n<p style=\"font-size:18.5px\">Master the <strong>Revenue Run Rate<\/strong> concept so you can use it on the job in <a href=\"https:\/\/finance-able.com\/investment-banking-career-path\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Investment Banking<\/span><\/strong><\/a>, <a href=\"https:\/\/finance-able.com\/private-equity-vs-venture-capital\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Private Equity<\/span><\/strong><\/a>, and <a href=\"https:\/\/finance-able.com\/hedge-fund-vs-mutual-fund\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Investment Management<\/span><\/strong><\/a>.<\/p>\n\n\n\n<div style=\"height:5px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">In this article, you will learn:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Why the Revenue Run Rate matters<\/strong>.<\/li>\n\n\n\n<li>How to <strong>Calculate Revenue Run Rate<\/strong>.<\/li>\n\n\n\n<li>The <strong>pitfalls<\/strong> of Revenue Run Rate calculations.<\/li>\n\n\n\n<li>Other Run Rate Applications (<strong>SAAS ARR and EBITDA<\/strong>).<\/li>\n<\/ul>\n\n\n\n<p class=\"yoast-reading-time__wrapper\"><span class=\"yoast-reading-time__icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-icon=\"clock\" width=\"20\" height=\"20\" fill=\"none\" stroke=\"currentColor\" style=\"display:inline-block;vertical-align:-0.1em\" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 24 24\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M12 8v4l3 3m6-3a9 9 0 11-18 0 9 9 0 0118 0z\"><\/path><\/svg><\/span><span class=\"yoast-reading-time__spacer\" style=\"display:inline-block;width:1em\"><\/span><span class=\"yoast-reading-time__descriptive-text\">Estimated reading time: <\/span><span class=\"yoast-reading-time__reading-time\">12<\/span><span class=\"yoast-reading-time__time-unit\"> minutes<\/span><\/p>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n\n\n<div style=\"height:65px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-tl-dr\" style=\"font-size:35px\"><strong>TL;DR<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>Revenue Run Rate<\/strong> typically reflects <strong>Annualized Revenue<\/strong>.<\/li>\n\n\n\n<li><strong>Seasonality<\/strong> and <strong>One-Time Items<\/strong> can distort <strong>Run Rate Calculations<\/strong>.<\/li>\n\n\n\n<li>Run Rate is used for various<strong> metrics <\/strong>(ARR, EBITDA, etc.) to show <strong>potential Annualized performance<\/strong>.<\/li>\n<\/ul>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-columns containerwidth is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\"><div class=\"kb-row-layout-wrap kb-row-layout-id46290_cd5276-7c alignnone wp-block-kadence-rowlayout\"><div class=\"kt-row-column-wrap kt-has-1-columns kt-row-layout-equal kt-tab-layout-inherit kt-mobile-layout-row kt-row-valign-top\">\n\n<div class=\"wp-block-kadence-column kadence-column46290_879958-68\"><div class=\"kt-inside-inner-col\">\n<h2 class=\"wp-block-heading\" id=\"h-want-to-learn-more-about-finance\" style=\"font-size:35px\"><strong>Want To Learn More About Finance?<\/strong> <\/h2>\n\n\n\n<p style=\"font-size:18px\"><strong>Ramp up faster with all of our (free) deep-dive articles in our<\/strong> <a href=\"https:\/\/finance-able.com\/analyst-starter-kit\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Analyst Starter Kit<\/span><\/strong><\/a>:<\/p>\n\n\n<div class=\" wp-block-kadence-portfoliogrid kb-blocks-portfolio-loop-block alignnone kb-portfolio-loop46290_07ace9-22 kb-portfolio-grid-layout-carousel kt-blocks-carousel \"><div class=\" kb-portfolio-grid-layout-carousel-wrap kt-post-grid-layout-carousel-wrap kt-carousel-arrowstyle-whiteondark kt-carousel-dotstyle-dark splide kb-blocks-portfolio-img-hover-zoomout kb-blocks-portfolio-content-hover-zoomin\" data-columns-xxl=\"3\" data-columns-xl=\"3\" data-columns-md=\"3\" data-columns-sm=\"2\" data-columns-xs=\"1\" data-columns-ss=\"1\" data-slider-center-mode=\"false\" data-slider-type=\"carousel\" data-slider-anim-speed=\"400\" data-slider-scroll=\"1\" data-slider-dots=\"true\" data-slider-arrows=\"true\" data-slider-hover-pause=\"false\" data-slider-auto=\"true\" data-slider-center-mode=\"false\" data-slider-speed=\"7000\" data-show-pause-button=\"false\" data-slider-gap=\"30\" data-slider-gap-tablet=\"30\" data-slider-gap-mobile=\"30\" data-slider-gap-unit=\"px\" data-item-selector=\".kb-portfolio-masonry-item\"><div class=\"kadence-splide-slider-init splide__track\"><ul><li class=\"kb-portfolio-slider-item kb-slide-item\"><div class=\"kb-blocks-portfolio-grid-item\"><div class=\"kb-blocks-portfolio-grid-item-inner-wrap kb-feat-image-align-none\"><div class=\"kadence-portfolio-image\"><div class=\"kadence-portfolio-image-intrisic kt-image-ratio-nocrop\" style=\"padding-bottom:56.25%\"><div class=\"kadence-portfolio-image-inner-intrisic\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2023\/03\/unlevered-beta-formula-lightbulb-1024x576.png\" class=\"attachment-large size-large wp-post-image\" alt=\"An image of a lightbulb with the text Unlevered Beta Formula\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2023\/03\/unlevered-beta-formula-lightbulb-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2023\/03\/unlevered-beta-formula-lightbulb-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2023\/03\/unlevered-beta-formula-lightbulb-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2023\/03\/unlevered-beta-formula-lightbulb.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/div><\/div><\/div><div class=\"kb-portfolio-grid-item-inner\"><a href=\"https:\/\/finance-able.com\/unlevered-beta-formula\/\" aria-label=\"Unlevered Beta Formula &#8211; Ultimate Guide\" class=\"portfolio-hover-item-link\"><\/a><div class=\"kb-portfolio-overlay-color\"><\/div><div class=\"kb-portfolio-overlay-border\"><\/div><div class=\"kb-portfolio-content-item-inner\"><h3 class=\"entry-title kb-portfolio-loop-title\">Unlevered Beta Formula &#8211; Ultimate Guide<\/h3><\/div><\/div><\/div><\/div><\/li><li class=\"kb-portfolio-slider-item kb-slide-item\"><div class=\"kb-blocks-portfolio-grid-item\"><div class=\"kb-blocks-portfolio-grid-item-inner-wrap kb-feat-image-align-none\"><div class=\"kadence-portfolio-image\"><div class=\"kadence-portfolio-image-intrisic kt-image-ratio-nocrop\" style=\"padding-bottom:56.25%\"><div class=\"kadence-portfolio-image-inner-intrisic\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2023\/01\/lightbulb-purchase-price-allocation-1024x576.png\" class=\"attachment-large size-large wp-post-image\" alt=\"A lightbulb and the words Purchase Price Allocation\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2023\/01\/lightbulb-purchase-price-allocation-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2023\/01\/lightbulb-purchase-price-allocation-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2023\/01\/lightbulb-purchase-price-allocation-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2023\/01\/lightbulb-purchase-price-allocation.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/div><\/div><\/div><div class=\"kb-portfolio-grid-item-inner\"><a href=\"https:\/\/finance-able.com\/purchase-price-allocation\/\" aria-label=\"Purchase Price Allocation in 4 Steps &#8211; The Ultimate Guide\" class=\"portfolio-hover-item-link\"><\/a><div class=\"kb-portfolio-overlay-color\"><\/div><div class=\"kb-portfolio-overlay-border\"><\/div><div class=\"kb-portfolio-content-item-inner\"><h3 class=\"entry-title kb-portfolio-loop-title\">Purchase Price Allocation in 4 Steps &#8211; The Ultimate Guide<\/h3><\/div><\/div><\/div><\/div><\/li><li class=\"kb-portfolio-slider-item kb-slide-item\"><div class=\"kb-blocks-portfolio-grid-item\"><div class=\"kb-blocks-portfolio-grid-item-inner-wrap kb-feat-image-align-none\"><div class=\"kadence-portfolio-image\"><div class=\"kadence-portfolio-image-intrisic kt-image-ratio-nocrop\" style=\"padding-bottom:45.138888888889%\"><div class=\"kadence-portfolio-image-inner-intrisic\"><img loading=\"lazy\" decoding=\"async\" width=\"720\" height=\"325\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png\" class=\"attachment-large size-large wp-post-image\" alt=\": A stick figure answering an interview question with the title text &#039;Walk Me Through an LBO&#039; below\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1.png 720w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1-300x135.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1-400x181.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1-624x282.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1-50x23.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/06\/0-Walk-Me-Through-a-DCF-Definitive-Guide-Cover-1-100x45.png 100w\" sizes=\"auto, (max-width: 720px) 100vw, 720px\" \/><\/div><\/div><\/div><div class=\"kb-portfolio-grid-item-inner\"><a href=\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\" aria-label=\"Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide\" class=\"portfolio-hover-item-link\"><\/a><div class=\"kb-portfolio-overlay-color\"><\/div><div class=\"kb-portfolio-overlay-border\"><\/div><div class=\"kb-portfolio-content-item-inner\"><h3 class=\"entry-title kb-portfolio-loop-title\">Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide<\/h3><\/div><\/div><\/div><\/div><\/li><\/ul><\/div><div class=\"clearfix\" style=\"clear:both\"><\/div><\/div><\/div><\/div><\/div>\n\n<\/div><\/div>\n\n\n<p><\/p>\n<\/div>\n<\/div>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-does-the-revenue-run-rate-matter\" style=\"font-size:35px\"><strong>Why Does the Revenue Run Rate Matter?<\/strong><\/h2>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-1024x576.png\" alt=\"An image of a stick figure in an interview thinking the boss is asking about running\" class=\"wp-image-46148\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-in-meeting-confused-about-revenue-run-rate.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\"><strong>You just landed your dream job. You are in your first meeting.<\/strong><\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\"><strong>The boss turns to you and says, \u2018<em>this Company has grown 50% versus last Quarter. What\u2019s the Run Rate based on last month?<\/em>\u2019<\/strong><\/p>\n\n\n\n<p style=\"font-size:18.5px\">And all you can think about is <strong>\u2018<em>running<\/em>\u2019 out of the meeting<\/strong> to avoid embarrassment! Don\u2019t worry. <strong>We\u2019ve all been there!<\/strong><\/p>\n\n\n\n<p style=\"font-size:18.5px\">In this article, we will clarify the <strong>Run Rate definition<\/strong>. And you will be able to <strong>answer any question related to Run Rates<\/strong>.<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-is-a-run-rate\" style=\"font-size:26px\"><strong>What is a Run Rate?<\/strong><\/h3>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\"><strong>Revenue Run Rate<\/strong> is a <strong>critical concept<\/strong> to master if you are <strong>aiming for (or working in) Finance<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>Let\u2019s start with, how do we define \u2018Run Rate?\u2019<\/strong><\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">A <strong><u>Run Rate<\/u><\/strong> is the <strong>estimated future performance of a Business, based on a recent period of performance<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">In other words, if we were to <strong>&#8216;run&#8217; the recent period<\/strong> of performance <strong>into the future, how would that look?<\/strong><\/p>\n\n\n\n<p style=\"font-size:18.5px\">In most cases, the <strong>Run Rate reflects<\/strong> estimated <strong>future Annual performance based on <\/strong>recent Monthly or Quarterly data.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-1024x576.png\" alt=\"An image contrasting the difference between actual and run rate performance. \" class=\"wp-image-46454\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-vs-run-rate-performance-1.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-is-run-rate-used-on-the-job\" style=\"font-size:26px\"><strong>How is Run Rate Used on the Job?<\/strong><\/h3>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Finance professionals typically <strong>use Run Rate<\/strong> calculations when a <strong>Business experiences a big change<\/strong> and <strong>recent performance does not reflect potential future performance<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">This concept is <strong>critical<\/strong> with <strong>early-stage, high-growth businesses<\/strong>. As <strong>growth accelerates for an early-stage Business<\/strong>, the <strong>current month <\/strong>may look<strong> nothing like the last<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">But, as we will see, <strong>Run Rate<\/strong> calculations are <strong>used across nearly every area of Finance<\/strong>.<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Now let\u2019s <strong>take a quick detour and see <\/strong>how the <strong>Revenue Run Rate<\/strong> concept shows up in <strong>Interviews<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">If you want to skip the <strong><u>interview discussion<\/u><\/strong>, you can hop right to the<strong> Revenue Run Rate Calculation by clicking <a href=\"#h-how-to-calculate-the-annual-revenue-run-rate-in-2-steps\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">here<\/span><\/a>.<\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-revenue-run-rate-in-interviews\" style=\"font-size:26px\"><strong>Revenue Run Rate in Interviews<\/strong><\/h3>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-1024x576.png\" alt=\"An image of a stick figure in an interview asked about the Revenue Run Rate concept.\" class=\"wp-image-46143\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/a-stick-figure-in-interview-run-rate.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n<!-- This site is converting visitors into subscribers and customers with OptinMonster - https:\/\/optinmonster.com :: Campaign Title: Revenue Run Rate - Obfuscation -->\n<div id=\"om-fr82buew5sphz6obe0gp-holder\"><\/div>\n<script>(function(d,u,ac){var s=d.createElement('script');s.type='text\/javascript';s.src='https:\/\/a.omappapi.com\/app\/js\/api.min.js';s.async=true;s.dataset.user=u;s.dataset.campaign=ac;d.getElementsByTagName('head')[0].appendChild(s);})(document,130718,'fr82buew5sphz6obe0gp');<\/script>\n<!-- \/ OptinMonster -->\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">While <strong>not as common<\/strong> as questions like \u2018<a href=\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Walk Me Through a DCF<\/span><\/strong><\/a>\u2019 or \u2018<a href=\"https:\/\/finance-able.com\/walk-me-through-an-lbo\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Walk Me Through an LBO<\/span><\/strong><\/a>,\u2019 <strong>Revenue Run Rate<\/strong> can come up in an Interview.<\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>And you do not want to be caught flat-footed.<\/strong><\/p>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">A few <strong>common interview questions <\/strong>are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>What is the Revenue Run Rate?<\/em><\/li>\n\n\n\n<li><em>How do you calculate the Revenue Run Rate?<\/em><\/li>\n\n\n\n<li><em>A company has $100 in Revenue in the most recent month or Quarter. What\u2019s the run rate?<\/em><\/li>\n<\/ul>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">To answer these questions, you will <strong>need to understand:<\/strong><\/p>\n\n\n\n<ol style=\"list-style-type:1\" class=\"wp-block-list\">\n<li>The underlying <strong>meaning of \u2018Run Rate\u2019<\/strong> (<strong>covered <a href=\"#h-why-does-the-revenue-run-rate-matter\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">above<\/span><\/a><\/strong>).<\/li>\n\n\n\n<li>The <strong>Revenue Run Rate Calculation<\/strong> (<a href=\"#h-how-to-calculate-the-annual-revenue-run-rate-in-2-steps\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">next section<\/span><\/strong><\/a>) and <strong>common pitfalls<\/strong> (<a href=\"#h-pitfalls-with-revenue-run-rate-calculations\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">click here<\/span><\/strong><\/a>).<\/li>\n\n\n\n<li>Typical uses of <strong>Revenue Run Rate on the Job <\/strong>(<strong><a href=\"#h-other-run-rate-applications-saas-arr-and-ebitda\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">click here<\/span><\/a><\/strong>)<strong>.<\/strong><\/li>\n<\/ol>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\"><strong>After reading this article, you will nail any Interview Questions involving a Run Rate calculation.<\/strong><\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>Let\u2019s dive in!<\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-calculate-annual-revenue-run-rate-in-2-steps\" style=\"font-size:35px\"><strong>Calculate Annual Revenue Run Rate in 2 Steps<\/strong><\/h2>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">We\u2019ll begin with the <strong>Annual<\/strong> <strong>Revenue Run Rate Formula<\/strong>, which breaks into just <strong>two steps<\/strong>:<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-1024x576.png\" alt=\"An image showing the two steps of the Revenue Run Rate Calculation for Annual Performance.\" class=\"wp-image-46150\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/two-steps-to-calculate-annual-revenue-run-rate.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-how-to-calculate-the-annual-revenue-run-rate\" style=\"font-size:26px\"><strong>How to Calculate the (Annual) Revenue Run Rate<\/strong><\/h3>\n\n\n\n<div class=\"schema-how-to wp-block-yoast-how-to-block\"><p class=\"schema-how-to-description\"><\/p> <ol class=\"schema-how-to-steps\"><li class=\"schema-how-to-step\" id=\"how-to-step-1629870563799\"><strong class=\"schema-how-to-step-name\"><strong><em>Find the Revenue for the Relevant Period<\/em><\/strong><\/strong> <p class=\"schema-how-to-step-text\">Find the Company\u2019s Revenue for the Relevant Period. The Relevant Period is the recent period you want to use to estimate a full year of performance (typically the latest month or Quarter). With a public company, you often only have Quarterly performance. You can find quarterly data in the Company\u2019s public financial filings (<a href=\"https:\/\/www.sec.gov\/edgar\/searchedgar\/companysearch.html\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">SEC Edgar Search<\/span><\/strong><\/a>).<br\/>\u00a0<br\/>If you are doing this exercise for your Company or a Privately held Client, you will need to ask the Accounting department or the Client, respectively for the numbers.<\/p> <\/li><li class=\"schema-how-to-step\" id=\"how-to-step-1629870882572\"><strong class=\"schema-how-to-step-name\"><strong><em>Multiply Revenue by the number of times the Relevant Period occurs within a Year<\/em><\/strong><\/strong> <p class=\"schema-how-to-step-text\">Determine the number of times the Relevant Period occurs in one year (e.g. 4 times for Quarterly and 12 times for Monthly data).<br\/><br\/>Then multiply the Revenue (from Step 1) by the number of times the Relevant Period occurs within one year.<\/p> <\/li><\/ol><\/div>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Below are examples of <strong>Revenue Run Rate<\/strong> using both <strong>Monthly<\/strong> and <strong>Quarterly numbers<\/strong>.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-1024x576.png\" alt=\"Examples of Annual Run Rate calculated from monthly or quarterly data.\" class=\"wp-image-46146\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-based-on-quarter-and-monthly-data.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-other-run-rates-weekly-monthly-etc\" style=\"font-size:26px\"><strong>Other Run Rates (Weekly, Monthly, etc.)<\/strong><\/h3>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Thus far, we have <strong>focused<\/strong> on converting <strong>Monthly and Quarterly<\/strong> data to an <strong>Annual Run Rate<\/strong> because those are the <strong>most common applications<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">With that said, we <strong>can apply Run Rate to <u>any<\/u> time period<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">Below are a few examples:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Weekly Run Rate (based on one day)<\/strong>: Monday Revenue of $10 * 7 = $70 Revenue Weekly Run Rate.<\/li>\n\n\n\n<li><strong>Monthly Run Rate (based on one week)<\/strong>: January Week 1 Revenue of $100 * 4 = $400 January Monthly Run Rate Revenue.<\/li>\n<\/ul>\n\n\n\n<p style=\"font-size:18.5px\">In short, <strong>Run Rate<\/strong> is a concept that <strong>can be applied<\/strong> to nearly <strong>any time period<\/strong> to <strong>extrapolate future performance<\/strong>.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-annual-run-rate-revenue-example-snowflake\" style=\"font-size:26px\"><strong>Annual Run Rate Revenue Example: Snowflake<\/strong><\/h3>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-1024x576.png\" alt=\"A stick figure wondering what the potential annual Revenue could be for Snowflake\" class=\"wp-image-46287\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/stick-figure-thinking-about-annual-revenue-potential-for-snowflake-1.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<p style=\"font-size:18.5px\">Let\u2019s imagine we are <strong>analyzing <\/strong><a href=\"https:\/\/www.snowflake.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Snowflake<\/span><\/strong><\/a><strong>, <\/strong>a rapidly growing <a href=\"https:\/\/en.wikipedia.org\/wiki\/Software_as_a_service\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Software as a Service (SAAS)<\/span><\/strong><\/a>, in <strong>early 2021<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">The boss has asked you to estimate the <strong><u>potential Annual Revenue for Snowflake<\/u><\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">For <strong>Fiscal Year 2020<\/strong>, the Company&#8217;s <strong>Revenue grew 124% versus<\/strong> the prior year. Not bad at all!<\/p>\n\n\n\n<p style=\"font-size:18.5px\">But we <strong>need<\/strong> <strong>to see<\/strong> what <strong>Annualized Revenue<\/strong> would look like in <strong>2021<\/strong> if the Snowflake<strong> sustains Q4 Revenue levels<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">In the <strong>Fourth Quarter of Fiscal 2020<\/strong>, the Company <strong>generated $190 million in Revenue<\/strong>. <\/p>\n\n\n\n<p style=\"font-size:18.5px\">To get to the <strong>Annual Run Rate<\/strong>, we would <strong>multiply Q4 Revenue by four<\/strong>.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-1024x576.png\" alt=\"A bar chart showing the annual revenue run rate for Snowflake.\" class=\"wp-image-46285\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/run-rate-revenue-calculation-snowflake-1.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">If Snowflake were to <strong>sustain<\/strong> its <strong>Q4<\/strong> <strong>level of Revenue<\/strong>, the <strong>Annualized Revenue<\/strong> (i.e. Run Rate) would be <strong>$762 million<\/strong> (nearly 30% higher than the <a href=\"https:\/\/finance-able.com\/ltm-revenue\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Last Twelve Months<\/span><\/strong><\/a> of performance).<\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>As you can see, <\/strong>the <strong>Annual Run Rate<\/strong> estimate is <strong>quite different from full-year 2020 Revenue of $592 million<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">In the <strong>First Quarter<\/strong> <strong>of 2021 <\/strong>alone, Snowflake generated <strong>$230 million in Revenue<\/strong> (a new Annual Run Rate of $920M). <\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>In both Q4 2020 and Q1 2021<\/strong>, the <strong>Annual Run Rate<\/strong> was <strong>far different<\/strong> than the <strong>most recent year<\/strong> of performance. <\/p>\n\n\n\n<p style=\"font-size:18.5px\">As you can see in this example, when a <strong>Business is experiencing dramatic growth<\/strong>, <strong>Run Rates<\/strong> are often <strong>more helpful<\/strong> than <strong>historical numbers<\/strong>. <strong><\/strong><\/p>\n\n\n\n<p style=\"font-size:18.5px\">With that said, <strong>Revenue Run Rate calculations<\/strong> do have a few <strong>shortcomings<\/strong>, which we <strong>address<\/strong> in the <strong>next section<\/strong>.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-pitfalls-with-revenue-run-rate-calculations\" style=\"font-size:35px\"><strong>Pitfalls with Revenue Run Rate Calculations<\/strong><\/h2>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-1024x576.png\" alt=\"An image showing that it is not a good idea to calculate run rates for business with high seasonality or one-time items.\" class=\"wp-image-46286\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/seasonality-and-one-time-items.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<p style=\"font-size:18.5px\">In the words of <a href=\"https:\/\/en.wikipedia.org\/wiki\/Yogi_Berra\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Yogi Berra<\/span><\/strong><\/a>, <strong><em>\u2018It&#8217;s tough to make predictions, especially about the future.&#8217;<\/em><\/strong><\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">When we calculate <strong>Annual<\/strong> <strong>Run Rate Revenue<\/strong>, we <strong>assume <\/strong>that the <strong>future will look exactly like<\/strong> <strong>the period <\/strong>we use<strong> to make<\/strong> <strong>the Run Rate calculation<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">If the <strong>Business experiences circumstances<\/strong> that are <strong>different in the future<\/strong>, the <strong>Run Rate<\/strong> calculation will <strong>fall apart<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">Below, we cover <strong>two examples<\/strong> of where <strong>Run Rate calculations do not work<\/strong>: Seasonality and One-Time Items.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-run-rate-revenue-pitfall-1-seasonality\" style=\"font-size:26px\"><strong>Run Rate Revenue Pitfall #1: Seasonality<\/strong><\/h3>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Some <strong>Businesses experience seasonal fluctuations <\/strong>(or <a href=\"https:\/\/en.wikipedia.org\/wiki\/Seasonality\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Seasonality<\/span><\/strong><\/a>).<\/p>\n\n\n\n<p style=\"font-size:18.5px\">Below are a couple of examples:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Retail<\/strong>: Large portion of Revenue during the holidays (fourth calendar quarter).<\/li>\n\n\n\n<li><strong>Tax Providers<\/strong>: Large portion of Revenue during the tax season (second calendar quarter in the US).<\/li>\n<\/ul>\n\n\n\n<p style=\"font-size:18.5px\">With these Businesses, you <strong>cannot just annualize a single Quarter.<\/strong> If you do, the <strong>Run Rate <\/strong>will <strong>misrepresent<\/strong> the <strong>full-year performance,<\/strong> as you can see below with <a href=\"https:\/\/www.bestbuy.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Best Buy<\/span><\/strong><\/a>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>Best Buy&#8217;s full-year revenue<\/strong> in 2020 was only <strong>$47 billion<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">A <strong>Run Rate<\/strong> based on <strong>Best Buy&#8217;s Fourth Quarter in 2020<\/strong>, would result in <strong>estimated revenue <\/strong>of <strong>$68 billion<\/strong>. <\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>We&#8217;re not even in the ballpark!<\/strong><\/p>\n\n\n\n<p><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-1024x576.png\" alt=\"Bar chart showing you cannot calculate run rate for a seasonal business like Best Buy.\" class=\"wp-image-46289\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/best-buy-run-rate-does-not-work.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-run-rate-revenue-pitfall-2-one-time-items\" style=\"font-size:26px\"><strong>Run Rate Revenue Pitfall #2: One-Time Items<\/strong><\/h3>\n\n\n\n<p style=\"font-size:10px\"><\/p>\n\n\n\n<p style=\"font-size:18.5px\">Nearly <strong>any Business<\/strong> will <strong>experience <\/strong><a href=\"https:\/\/www.investopedia.com\/articles\/investing\/042413\/financial-statement-extraordinary-vs-nonrecurring-items.asp#:~:text=A%20nonrecurring%20item%20refers%20to%20an%20entry%20that%20appears%20on,to%20be%20infrequent%20or%20unusual.\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">&#8216;One-Time\u2019 or \u2018Non-Recurring\u2019 Events<\/span><\/strong><\/a>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">For example, at the <strong>outset of the pandemic<\/strong>, Puzzle Warehouse, the world\u2019s largest puzzle company, experienced a significant <strong>spike in Revenue<\/strong> because everyone stayed at home.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-1024x576.png\" alt=\"An excerpt from a CNBC article showing a one-time spike in puzzle demand due to the pandemic.\" class=\"wp-image-46284\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/pandemic-one-time-puzzle-demand.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Source: <a href=\"https:\/\/www.cnbc.com\/2020\/04\/03\/coronavirus-sends-demand-for-jigsaw-puzzles-surging.html\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">CNBC<\/span><\/strong><\/a><\/figcaption><\/figure>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Clearly, this type of <strong>Revenue<\/strong> is one-time in nature. <\/p>\n\n\n\n<p style=\"font-size:18.5px\">Therefore, you should <strong>avoid using Run Rate calculations to annualize<\/strong> results for companies experiencing a one-time event like this.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">Next, we will look at a few <strong>everyday situations<\/strong> where <strong>Run Rate<\/strong> is used in practice.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-other-run-rate-applications-saas-arr-and-ebitda\" style=\"font-size:35px\"><strong>Other Run Rate Applications: SAAS ARR and EBITDA<\/strong><\/h2>\n\n\n\n<div style=\"height:25px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Beyond Revenue, there are many <strong>other uses<\/strong> of <strong>Run Rate calculations<\/strong> across the <a href=\"https:\/\/finance-able.com\/buyside-vs-sellside\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Buy Side and Sell Side<\/span><\/strong><\/a><strong> in Finance<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">In the <strong>sections below<\/strong>, we cover the <strong>following Run Rate Calculations<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>SAAS Annual Recurring Revenue (ARR)<\/li>\n\n\n\n<li>Run Rate EBITDA<strong><\/strong><\/li>\n<\/ul>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-alternative-run-rate-example-1-saas-arr\" style=\"font-size:26px\"><strong>Alternative Run Rate Example #1: SAAS ARR<\/strong><\/h3>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">Over the last decade, <strong>software companies<\/strong> like <strong><a href=\"https:\/\/www.adobe.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">Adobe<\/span><\/a><\/strong> and others have <strong>moved to recurring subscriptions instead of one-time license sales. <\/strong>&nbsp;<\/p>\n\n\n\n<p style=\"font-size:18.5px\">Technology <strong>businesses taking this approach<\/strong> are called <strong>Software as a Services (or <a href=\"https:\/\/searchcloudcomputing.techtarget.com\/definition\/Software-as-a-Service\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">\u2018SAAS\u2019<\/span><\/a>)<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">The <strong>subscriptions<\/strong> they offer are <strong>recurring in nature<\/strong>, which provides <strong>visibility into future Revenue<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">As a result, <strong>SAAS Businesses<\/strong> often <strong>use a metric called <\/strong><a href=\"https:\/\/www.zuora.com\/billing-topics\/annual-recurring-revenue\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Annual Recurring Revenue (A<\/span><\/strong><\/a><strong><a href=\"https:\/\/www.zuora.com\/billing-topics\/annual-recurring-revenue\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"has-inline-color has-vivid-cyan-blue-color\">RR)<\/span><\/a><\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">The <strong>ARR calculation<\/strong> shows the <strong>Annual Run Rate of monthly subscription revenues<\/strong>. <strong>ARR<\/strong> <strong>helps operators and Investors<\/strong> understand <strong>annual Revenue potential<\/strong> of the Business.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-1024x576.png\" alt=\"Adobe Q1 2021 Investor Presentation showing Annual Recurring Revenue (ARR)\" class=\"wp-image-46142\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/adobe-arr-Q1-filing.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:70px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-alternative-run-rate-example-2-run-rate-ebitda\" style=\"font-size:26px\"><strong>Alternative Run Rate Example #2: Run Rate EBITDA<\/strong><\/h3>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\"><strong>Let\u2019s imagine<\/strong> it&#8217;s <strong>six months<\/strong> after a <a href=\"https:\/\/finance-able.com\/walk-me-through-an-lbo\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Leveraged Buyout<\/span><\/strong><\/a> purchase by a <a href=\"https:\/\/finance-able.com\/private-equity-vs-venture-capital\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Private Equity<\/span><\/strong><\/a> firm. And the Investors implement a <strong>cost savings initiative<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">Let\u2019s also say that <a href=\"https:\/\/www.investopedia.com\/terms\/e\/ebitda.asp\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">EBITDA<\/span><\/strong><\/a> was <strong>$10 million per Quarter in Q1 and Q2 <\/strong>of the current year. <\/p>\n\n\n\n<p style=\"font-size:18.5px\">But, after the cost savings, the <strong>new quarterly EBITDA is $12 million per Quarter<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">For the <strong>full year<\/strong>, the Business will <strong>generate Actual EBITDA of $44 million<\/strong>, but this <strong>does not capture<\/strong> the full <strong>annual potential EBITDA<\/strong> of the Business.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">The full potential is the <strong>Run Rate EBITDA of $48 million<\/strong>, as you can see below.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-1024x576.png\" alt=\"Actual EBITDA vs Run Rate EBITDA example\" class=\"wp-image-46140\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-1024x576.png 1024w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-300x169.png 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-768x432.png 768w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-400x225.png 400w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-624x351.png 624w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-50x28.png 50w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda-100x56.png 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2021\/08\/actual-ebitda-vs-run-rate-ebitda.png 1280w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\">In addition to Private Equity,  <strong>Run Rate EBITDA <\/strong>is also <strong>widely used in <\/strong><a href=\"https:\/\/finance-able.com\/investment-banking-career-path\/\"><strong><span class=\"has-inline-color has-vivid-cyan-blue-color\">Investment Banking<\/span><\/strong><\/a> to show a \u2018<em>normalized<\/em>\u2019 version of <strong>EBITDA<\/strong> when selling a <strong>Business<\/strong>. <\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-wrap-up-revenue-run-rate\" style=\"font-size:35px\"><strong>Wrap-Up: Revenue Run Rate<\/strong><\/h2>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:18.5px\"><strong>Hopefully<\/strong>, you now have a <strong>much better grasp <\/strong>of the <strong>Revenue Run Rate Calculation<\/strong>. And also the <strong>underlying idea<\/strong> behind the <strong>Revenue Run Rate<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\">The <strong>Revenue Run Rate<\/strong> (and other <strong>Run Rates<\/strong>) are <strong>critical<\/strong> because they help us <strong>capture <\/strong>a Business\u2019 potential <strong>Annual performance<\/strong>.<\/p>\n\n\n\n<p style=\"font-size:18.5px\"><strong>Let us know if you have any questions in the comments below. We\u2019d love to hear from you!<\/strong><strong><\/strong><\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-about-the-author\" style=\"font-size:35px\"><strong>About the Author <\/strong><\/h2>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignleft size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"500\" height=\"500\" src=\"https:\/\/finance-able.com\/wp-content\/uploads\/2020\/12\/MK-Photo.jpg\" alt=\"Picture of Mike Kimpel, Founder of Finance|able\" class=\"wp-image-26350\" style=\"width:266px;height:266px\" srcset=\"https:\/\/finance-able.com\/wp-content\/uploads\/2020\/12\/MK-Photo.jpg 500w, https:\/\/finance-able.com\/wp-content\/uploads\/2020\/12\/MK-Photo-300x300.jpg 300w, https:\/\/finance-able.com\/wp-content\/uploads\/2020\/12\/MK-Photo-100x100.jpg 100w, https:\/\/finance-able.com\/wp-content\/uploads\/2020\/12\/MK-Photo-150x150.jpg 150w, https:\/\/finance-able.com\/wp-content\/uploads\/2020\/12\/MK-Photo-50x50.jpg 50w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/figure>\n<\/div>\n\n\n<p class=\"has-normal-font-size\"><a href=\"https:\/\/finance-able.com\/about-us\/\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Mike Kimpel<\/mark><\/strong><\/a> is the <strong>Founder and CEO<\/strong> of <strong>Finance|able<\/strong>, a next-generation Finance Career Training platform. Mike has worked in Investment Banking, Private Equity, Hedge Fund, and Mutual Fund roles during his career.<\/p>\n\n\n\n<p class=\"has-normal-font-size\">He is an <strong>Adjunct Professor<\/strong> in <strong>Columbia Business School&#8217;s <a href=\"https:\/\/business.columbia.edu\/heilbrunn\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Value Investing Program<\/mark><\/a><\/strong> and leads the Finance track at <a href=\"https:\/\/www.accessdistributed.org\/\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>Access Distributed<\/strong><\/mark><\/a>, a non-profit that creates access to top-tier Finance jobs for students at non-target schools from underrepresented backgrounds.<\/p>\n\n\n\n<div class=\"wp-block-kadence-icon kt-svg-icons kt-svg-icons_202caf-eb alignnone\">\n<div class=\"kt-svg-style-default kt-svg-icon-wrap kt-svg-item-_c75482-24\"><a href=\"https:\/\/www.instagram.com\/survivefinance\/\" class=\"kt-svg-icon-link\" target=\"_blank\" rel=\"noopener noreferrer\" aria-label=\"Financeable Instagram\"><span class=\"kb-svg-icon-wrap kb-svg-icon-fe_instagram\"><svg viewBox=\"0 0 24 24\"  fill=\"none\" stroke=\"currentColor\" stroke-width=\"2\" stroke-linecap=\"round\" stroke-linejoin=\"round\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"  aria-hidden=\"true\"><rect x=\"2\" y=\"2\" width=\"20\" height=\"20\" rx=\"5\" ry=\"5\"\/><path d=\"M16 11.37A4 4 0 1 1 12.63 8 4 4 0 0 1 16 11.37z\"\/><line x1=\"17.5\" y1=\"6.5\" x2=\"17.5\" y2=\"6.5\"\/><\/svg><\/span><\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions\" style=\"font-size:35px\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1629870710848\"><strong class=\"schema-faq-question\"><strong><em>How to calculate run rate?<\/em><\/strong><\/strong> <p class=\"schema-faq-answer\">For an Annual Run rate, you first find Financial data for a recent time period that you would like to use to estimate potential annual performance. Second, determine the number of times that period occurs within a year (e.g. 4 for Quarterly, 12 for Monthly). Third, multiply the number of occurrences per year by your financial metric (Revenue, EBITDA, etc.) to arrive at the Annual Run Rate.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1629871337358\"><strong class=\"schema-faq-question\"><strong><em>What does run rate mean?<\/em><\/strong><\/strong> <p class=\"schema-faq-answer\">Run Rate reflects extrapolated performance (usually for a full year) based on performance during a recent period of time.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1629871374251\"><strong class=\"schema-faq-question\"><strong><em>What is run rate in Finance?<\/em><\/strong><\/strong> <p class=\"schema-faq-answer\">The Run Rate reflects estimated performance based on a recent period&#8217;s performance.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1629871405519\"><strong class=\"schema-faq-question\"><strong><em>What is run rate EBITDA?<\/em><\/strong><\/strong> <p class=\"schema-faq-answer\">Run Rate reflects extrapolated performance based on EBITDA performance during a recent period of time.<\/p> <\/div> <\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-related-links\" style=\"font-size:35px\"><strong>Related Links<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-yoast-seo-related-links yoast-seo-related-links\">\n<li><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><a href=\"https:\/\/finance-able.com\/walk-me-through-a-dcf\/\"><strong>Walk Me Through a DCF in 5 Steps &#8211; The Ultimate Guide (2021 Updated)<\/strong><\/a><\/mark><\/li>\n\n\n\n<li><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong><a href=\"https:\/\/finance-able.com\/investment-banking-career-path\/\">Investment Banking Career Path \u2013 Ultimate Guide (2021 Updated)<\/a><\/strong><\/mark><\/li>\n\n\n\n<li><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong><a href=\"https:\/\/finance-able.com\/private-equity-vs-venture-capital\/\">Private Equity vs Venture Capital &#8211; The Ultimate Guide (2021 Updated)<\/a><\/strong><\/mark><\/li>\n<\/ul>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/finance-able.com\/\">Home<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\">What is a Revenue Run Rate? \u2013 The Ultimate Guide<\/span><\/span><\/div>\n\n\n<p><\/p>\n<style class=\"advgb-styles-renderer\">.kb-table-of-content-nav.kb-table-of-content-id46290_487e27-f3 .kb-table-of-content-wrap{margin-top:20px;margin-right:20px;margin-bottom:20px;margin-left:20px;padding-top:var(--global-kb-spacing-sm, 1.5rem);padding-right:var(--global-kb-spacing-sm, 1.5rem);padding-bottom:var(--global-kb-spacing-sm, 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    "rendered": "<p>Master the Revenue Run Rate concept so you can use it on the job in Investment Banking, Private Equity, and Investment Management. In this article, you will learn: TL;DR Want To Learn More About Finance? Ramp up faster with all of our (free) deep-dive articles in our Analyst Starter Kit: Why Does the Revenue Run&#8230;<\/p>\n",
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                  "text": "Find the Company\u2019s Revenue for the Relevant Period. The Relevant Period is the recent period you want to use to estimate a full year of performance (typically the latest month or Quarter). With a public company, you often only have Quarterly performance. You can find quarterly data in the Company\u2019s public financial filings (SEC Edgar Search).\u00a0If you are doing this exercise for your Company or a Privately held Client, you will need to ask the Accounting department or the Client, respectively for the numbers."
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