Revenue run rate answers: "If the business keeps growing at this pace, what would annual revenue be?" It's a forward-looking estimate, not a guarantee.
Formula: Annual Run Rate = (Period Revenue / Period Months) × 12
Common use cases
- Q1 results: A company with $250k in Q1 has a $1M run rate
- Monthly reporting: A company with $100k MRR has a $1.2M run rate
- Investor communication: "We're at a $2M run rate and growing 15% MoM"
When run rate is reliable
Run rate is most reliable when: - Revenue is stable month-over-month (low seasonality) - The measurement period is representative - No large one-time items distort the period
When run rate is misleading
- Seasonality: December retail revenue × 12 ≠ annual revenue
- One-time contracts: A $200k consulting deal inflates the monthly run rate
- High growth: Growing 15% MoM means last month's run rate understates full-year revenue
For growing businesses, use compound growth projection instead of simple annualization.
Calculate yours at the Revenue Run Rate Calculator.