Recurring Revenue
Recurring revenue repeats across periods because of contractual arrangements or the structure of the business.
Recurring revenue can come from maintenance contracts, service agreements, or software subscriptions. Contract duration, cancellation rights, and minimum purchase commitments matter when assessing its reliability. Repeat purchases by a longstanding customer are not automatically secured by contract.
The calculator uses the reported recurring revenue share to adjust the EBITDA multiple. Whether that revenue is secure, and for how long, requires a separate review.
Example
Of EUR 8.0 million in total revenue, EUR 2.0 million comes from maintenance contracts and EUR 0.4 million from software subscriptions. Under these assumptions, recurring revenue represents 30% of total revenue.
Recurring revenue repeats across periods because of contractual arrangements or the structure of the business.