Term · Business Model & Operating KPIs
ARPU
In briefARPU (Average Revenue per User) indicates the average revenue per user. For digital small caps, the metric helps separate monetisation from pure user growth.
Definition
ARPU stands for Average Revenue per User and measures the average revenue per user.
How it is calculated
Formula. ARPU = revenue / average number of users in the period.
Why it matters for small caps
For digital small caps, ARPU helps separate monetisation from pure user growth.
Common misreadings
- ARPU is often interpreted without cohorts, customer mix and pricing model.
In the process
Frequently asked
What is ARPU?
It is the average revenue per user over a period. It thus shows how well a provider monetises its user base.
How is ARPU calculated?
You divide the revenue by the average number of users in the period. This gives the revenue per user.
What is a source of error with ARPU?
The value is often read without cohorts, customer mix and pricing model. Only this additional information makes it meaningful.
Related terms
Sources
Primary
ESMA – Guidelines on Alternative Performance Measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
Methodology
U.S. SEC – Non-GAAP Financial Measures
https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/non-gaap-financial-measures
https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/non-gaap-financial-measures
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.