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Recurring Revenue as Share of Total

The percentage of total revenue that comes from recurring agreements rather than projects, product resale and hourly work.

Finance

Formula

Recurring revenue (trailing 12 months) ÷ Total revenue (trailing 12 months) × 100

Why Track It

Recurring revenue is predictable, survives a change of ownership and drives valuation multiples. A falling share means the business is drifting back toward project and break-fix revenue it has to win again every month.

How It Is Measured

Divide recurring revenue recognized in the trailing twelve months by total revenue recognized in the same period. Use accounting figures, with revenue lines mapped to recurring and non-recurring consistently. Report trailing twelve months so a large project quarter does not swing it.

Constraints

A share can rise simply because project work fell, which is not good news on its own. It depends on consistent revenue mapping in the chart of accounts.

Measurement Note

NinjaOne says investors prefer 70% or more of revenue from recurring managed services. Breakwater M&A says 80% or more commands premium multiples and below 60% faces valuation headwinds.

Referenced In

More in Finance

The recurring revenue base, the margins it earns and how quickly cash comes in. These numbers tell an MSP owner whether the business is priced right and worth what a buyer would pay for it.

All KPIs
Sources2
  1. NinjaOne: How to Value Your MSPninjaone.com
  2. Breakwater M&A: MSP and IT Services Valuation Multiplesbreakwaterma.com

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