I will go with the first option that you have provided.
In a recurring revenue business model, customers will pay for the product/service over a given period, known as the customer lifetime. The two key success factors for recurring revenue companies are customer acquisition and customer retention. In a recurring revenue business model, your company’s customer acquisition and service delivery expenses will outstrip the revenue earned in the previous period. For a recurring revenue business, all the investment is upfront, so the business being built needs to be sustainable. Furthermore, your customers will be paying monthly subscriptions, which are much smaller amounts of money than they would otherwise pay to a normal software business. That is why tracking MRR is important when building a sustainable business – it is the amount of revenue you expect to receive every month.
You can read more here: https://conseroglobal.com/the-guide-to-key-metrics-for-saas-and-recurring-revenue-models/
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath