Definition

Recurring revenue is that particular amount or proportion of a company that recurs over time. This proportion continues at regular intervals in the future and hence termed as recurring revenue.

Explanation

Suppose ABC Company sells widget-cleaning services. 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 and the company expects. The revenue from these contracts comes at regular intervals (monthly), and it has a reasonable expectation that the revenues will indeed materialize (because it has legal contracts with the customers).