Finance

Run Rate Revenue: Definition, Calculation and Limitations

Amy Richards | February 20, 2026 | 2 min read

Run rate extrapolates current performance to predict future annual revenue.

Run Rate Formula

Run Rate = Current Revenue × (12 / Months)

Example

Q1 Revenue: $3M

Run Rate = $3M × 4 = $12M

Limitations

• Assumes constant performance
• Ignores seasonality
• Not accurate for early-stage companies

When Used

• Valuation for startups
• Investor updates
• Budget planning

Internal links (related)

• EBITDA Margin
• Free Cash Flow
• DCF Valuation