Recurring Revenue
What is Recurring Revenue?
Recurring revenue is revenue that a company has reasonable assurance will occur at regular intervals in the future.
How Does Recurring Revenue Work?
Let's assume Company XYZ sells a widget-cleaning service. Its customers sign three-year contracts agreeing to spend $50 a month on widget cleaning. The future revenue associated with these contracts is called recurring revenue -- the company expects the revenue from these contracts to come at regular intervals (monthly), and it has a reasonable expectation that the revenues will indeed materialize (because it has legal contracts with the customers).
Why Does Recurring Revenue Matter?
Recurring revenue makes a company more stable and predictable both operationally and financially. This in turn lowers the risk associated with a company's operations, though a hiccup in sales can easily reduce this sense of security.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
