Finance

Monthly Recurring Revenue(MRR)

The normalized monthly value of all recurring revenue contracts.

Monthly Recurring Revenue is the normalized monthly value of all active recurring revenue contracts — the foundational metric for SaaS and subscription businesses. MRR breaks down into New MRR (from new customers), Expansion MRR (from existing customers upgrading), Contraction MRR (downgrades), and Churned MRR (cancellations). Net New MRR is the sum.

MRR vs revenue: an annual contract billed monthly counts as one month of MRR; an annual contract billed upfront still counts as 1/12 of contract value per month for MRR purposes. Don't conflate cash collected with MRR.

Formula

MRR = Sum of monthly recurring contract values across all active customers

Example

100 customers paying $200/month = $20,000 MRR. If 5 new customers join at $200, 2 churn, and one upgrades by $100: Net New MRR = $1,000 - $400 + $100 = $700.

Related terms

Annual Recurring Revenue(ARR)

MRR multiplied by 12 — the normalized annual value of recurring revenue.

Churn Rate

The percentage of customers who cancel in a given period.

Lifetime Value(LTV)

Total revenue (or profit) a customer generates over the entire relationship.

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Monthly Recurring Revenue(MRR)

Related terms

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