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What is Monthly recurring revenue?

The predictable monthly revenue from subscriptions.

Quick answer

Monthly recurring revenue (MRR) is the predictable revenue from subscriptions in a given month. Annual recurring revenue (ARR) is MRR times 12.

What it is

MRR is the sum of all subscription revenue normalised to a month. New MRR is added by new customers and expansion; churned MRR is lost by cancellations and downgrades. Net new MRR is the difference.

Why it matters

MRR is the heartbeat of a SaaS. It is predictable, recurring and compounds. Investors and operators track MRR growth, net new MRR and net revenue retention as the headline metrics.

How to use it

  1. Track new, expansion, churned and contraction MRR separately.
  2. Plot net new MRR by month on a chart you review weekly.
  3. Set targets by segment: SMB, mid-market, enterprise.

Examples

  • A SaaS adds a meaningful step-up in net new MRR in Q1 by closing 12 mid-market deals.

Frequently asked questions

What's the difference between MRR and ARR?
ARR is MRR times 12. Use ARR for annual reporting, MRR for monthly operations.

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