financial-metrics
Recurring revenue is income that is contractually or behaviourally expected to repeat — subscriptions, maintenance, retainers, contracted usage — as distinct from one-off product, project or professional-services sales.
Revenue is an accounting total. Recurring revenue is a quality slice of that total: the part a buyer can underwrite as likely to happen again without an equivalent new sale every year.
It is broader than ARR. A maintenance contract on installed equipment, a multi-year managed-service retainer, and a SaaS seat fee can all be recurring. A repeat customer who might reorder — with no contract — is repeat revenue, not contracted recurring. Diligence should not blur those.
A practical split:
Recurring revenue share = Recurring revenue / Total revenue
Define “recurring” in the accounting policy note for the deal: notice periods, auto-renewal, price indexation, and whether usage is committed.
Illustration only. Hypothetical field-service platform.
| Revenue type | Year | Share | Contract? |
|---|---|---|---|
| Software subscription | €7.0m | 50% | Yes — ARR €7.4m |
| Equipment maintenance | €4.2m | 30% | Yes — 90-day notice |
| Installation projects | €2.8m | 20% | No |
| Total IFRS revenue | €14.0m | 100% |
A strategic buyer may value the 80% recurring stack on a different multiple than the project tail. Calling the whole €14m “recurring” would be a representation problem in the SPA.
Buyers pay for duration, switching costs, and net retention — not for the adjective “recurring” on a slide. High recurring share with a 30-day out clause and one customer at 40% of sales is still a concentrated cash-flow story.
Business valuation of subscription and maintenance models; mix analysis in commercial due diligence; pricing of earnouts on the recurring base.
Recurring is not risk-free. Regulation, platform risk, and price regulation can hit contracted books. IFRS may recognise recurring fees on a different timetable than cash or ARR.
Dazur tags revenue lines as contracted-recurring, behaviourally repeat, or one-off before matching a file to financial buyers who underwrite duration versus trade buyers who may care more about strategic mix.