Monthly Recurring Revenue (MRR)

MRR is your subscription revenue heartbeat. It strips out one-time charges, professional services, and usage overages to show the predictable, recurring portion of revenue. For early and growth-stage SaaS companies, MRR is the metric that matters most because it's the clearest signal of business momentum.

MRR Components

• New MRR: Revenue from brand-new customers acquired this month
• Expansion MRR: Additional revenue from existing customers (upgrades, add-ons, seat additions)
• Contraction MRR: Revenue lost from downgrades within existing accounts
• Churn MRR: Revenue lost from customers who cancelled entirely
• Net New MRR: New + Expansion - Contraction - Churn. The number that tells the real growth story.

MRR vs Revenue

MRR and GAAP revenue aren't the same thing. A $120K annual contract recognized over 12 months is $10K/month in both MRR and revenue. But a $50K implementation fee recognized over the contract period adds to revenue without touching MRR. RevOps needs to track both, but MRR is the operating metric that drives day-to-day decisions.

MRR × 12 gives you a rough ARR, but see ARR for why the relationship isn't always that simple. For MRR's role in retention analysis, see Net Revenue Retention and ACV.