Average Revenue Per Paying Player is the mean average revenue attributed to a single player who at any point has made a purchase within a given game, over a defined time period. ARPPU is calculated from the total revenue across that time period, divided by the total number of paying players. Importantly, non-paying players are not considered when calculating ARPPU.
ARPPU is helpful in understanding how well a given game generates revenue from players who decide to spend. Whereas conversion is used to understand what percentage of players spend in their lifetime with a given game.
Note that ARPPU is distinct from ARPU.