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Question 39 - 700-805 discussion

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Customer A purchased a one-year WebEx contract of 100 seats at $10 per seat. Customer B purchases a three-year WebEx contract of 100 seats at $10 per seat.

What is the annual recurring revenue (ARR) for each?

A.

$1000 and $3000

Answers
A.

$1000 and $3000

B.

$1100 and $3300

Answers
B.

$1100 and $3300

C.

$1000 and $1000

Answers
C.

$1000 and $1000

D.

$3000 and $3000

Answers
D.

$3000 and $3000

Suggested answer: C

Explanation:

The annual recurring revenue (ARR) for each customer is $1000 and $1000. ARR is the total amount of money the company expects to receive from its subscribers over a year. It is calculated by summing up customers' monthly or quarterly subscription fees and multiplying them by 12 (for an annual period). It excludes one-time fees, transactional charges, and other non-recurring revenue sources. In this case, both Customer A and Customer B pay $10 per seat per month for 100 seats of WebEx. Therefore, their monthly recurring revenue (MRR) is $10 x 100 = $1000. To calculate their ARR, we multiply their MRR by 12: $1000 x 12 = $1000.The length of the contract does not affect the ARR calculation, as it only considers the revenue generated within one year.

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asked 11/10/2024
Lea Kohl
46 questions
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