Annualized Gross Profit as the New North Star: Why ARR's Usefulness is Diminishing

The article argues that Annual Recurring Revenue (ARR) is losing its utility as SaaS's foundational metric due to declining predictability and gross margin compression, particularly as AI products introduce lower-margin business models. The author proposes annualized gross profit dollars as a superior North Star metric that better reflects true unit economics and should cascade through valuation multiples, financial metrics, benchmarking, and sales compensation frameworks.