The EU Just Killed ARR

The EU Just Killed ARR

Annual Recurring Revenue (ARR) has been the backbone of SaaS for two decades.

It gave investors predictable growth curves. It gave founders leverage in fundraising. It let boards sleep at night.

But ARR was never a really well defined metric. And now, it may be practically dead in Europe.

With the EU Data Act (effective September 2025), every SaaS contract with an EU customer becomes a “cancel anytime” subscription. Customers can walk away with two months’ notice. No excuses, no lock-in.

What's good for consumers is now good for companies too.

But if ARR is no longer “annual”, but rather optional - is it actually good for companies?

What the law says

The EU Data Act is broad, covering connected products, IoT devices, and critically for SaaS: data processing services. Buried in the law is a simple obligation:

Providers must allow customers to terminate contracts at any time.

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