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Revenue metrics

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.

Net new MRR is what MRR did this month:

Net new MRR = new + expansion − contraction − churn

Each of the four is a different problem with a different owner. New MRR is acquisition. Expansion is the product and the account team. Contraction is usually pricing or value delivery. Churn splits again into voluntary and involuntary, and those two are fixed in completely different ways.

Reporting only the net figure hides all of that. Two businesses can post the same net new MRR when one added a lot and lost a lot and the other added a little and lost nothing, and those are not the same business.

Related terms

  • 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.
  • 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.
  • SaaS quick ratio New plus expansion MRR divided by contraction plus churned MRR. How much growth survives the leak.