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Comment by senordevnyc | Hacker News Reader

For all we know they could have a revenue of $100 and claim a run-rate revenue of $30B.

Can you explain how that’d work? What would the $30B figure be based on if they only have $100 in revenue?

They're pointing out that run-rate revenue is based on essentially sampling revenue over some limited time interval, then extrapolating from there assuming revenue always occurs at the same rate (or greater) over all similar intervals in the future. More specifically, they're pointing out that estimates of ARR derived from this kind of sampling are fundamentally prone to error and can be arbitrarily inflated based on how the time interval is sampled.

Of course, but the fact of the matter is that the same technique was used for the quarter prior to that, and there’s a 3x increase quarter over quarter.

As far as I understand run rate revenue is just a fancy way of saying that "the last month we had sales, and if that continues for a year we will have a AAR of 30B. meaning it's not 30B yet, but the sales numbers indicates that we get there by continue selling at the current speed. But to have revenue of $100 and get $30B in ARR I guess the period looked at needs to be seconds....

(Run Rate = Revenue in Period / # of Days in Period x 365)

Not even that. It's not based on actual sales in, for example, the past month. It's based on an expected continuous growth based on the growth of the past month (or whatever period you pick).

It's a forecast.

I cant say what all companies does. But my google seaches and and chatgpt Do not agree with you on that. They stick to actual sales.

I have never heard of SaaS companies reporting ARR like this.

Yeah this is not ARR but run rate revenue. when i was doing SASS we always used ARR, not run rate, but it seems to be a thing

There are about 30 million seconds in a year. If they made $100 over the last hundred milliseconds, then that’s $30B annualized.

(That said, their numbers are much realer than that.)

If you make a hundred dollars in 0.1 seconds, you could say your annualized revenue is $100 / 0.1 * 60 * 60 * 24 * 365 = -$30 billion.

That said, most people would use a monthly or quarterly period to estimate ARR. I'm not sure what Anthropic used. Probably monthly.

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