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Revenue metrics

MRR (Monthly Recurring Revenue)

The normalised monthly value of every active recurring subscription, with annual and multi-month plans spread evenly across the months they cover.

Monthly Recurring Revenue is the recurring part of your revenue, expressed as a monthly figure. A $1,200 annual plan contributes $100 of MRR, not $1,200 in the month it was billed. Normalising this way is the whole point: it lets you compare a month to the month before it without the answer depending on how many customers happened to renew annually.

MRR counts what recurs. One-off setup fees, professional services, hardware and overage that is not contracted do not belong in it. Usage that varies every month is the genuinely hard case: most teams either exclude it from MRR entirely and report it beside them, or include a trailing average and say so. Either is defensible. Switching between them mid-year is not.

The number only means something when it moves, which is why MRR is almost always reported as a movement: new, expansion, contraction and churn. See net new MRR for how those combine.

Related terms

  • ARR (Annual Recurring Revenue) The annualised value of your recurring subscriptions, normally MRR multiplied by twelve, used as the headline size of a subscription business.
  • Net new MRR The month-over-month change in MRR, built from new, expansion, contraction and churned MRR. The single number that says whether the business grew.
  • Expansion MRR Additional recurring revenue from existing customers: upgrades, added seats, add-ons and contracted usage growth, excluding anything from new customers.
  • Contraction MRR Recurring revenue lost from customers who stayed: downgrades, removed seats, dropped add-ons and reduced commitments.
  • Churned MRR Recurring revenue lost from customers who cancelled outright in the period, whether they chose to leave or their payments stopped working.