annualised run rate

Annualised run rate is a projection dressed up as a statistic. Take the revenue from the most recent month, multiply by twelve, and publish the result. Sometimes it is a quarter multiplied by four. When a startup announces a “500 million dollar run rate”, it has not earned 500 million dollars; it earned roughly 42 million last month and is inviting you to assume the rest.

It is not dishonest, and for a fast-growing subscription business it is a reasonable shorthand. But it flatters exactly the companies most likely to quote it, because a single strong month gets extrapolated across a year that has not happened. It also says nothing about profit, churn or how much was spent to win that revenue. When you see one in an AI funding story, mentally divide by twelve and ask what the trend looked like over the previous six months.