Monthly Recurring Revenue (MRR)
Total predictable monthly revenue from subscriptions.
Vanity Risk
Top-line MRR growth without decomposition is vanity. If 70% of growth comes from expansion revenue and new sales are flat, you have a concentration risk. Always break MRR into New, Expansion, Churn, and Contraction.
What it measures
Sum of all active subscription revenue, normalized to a monthly value. For annual plans, divide by 12. The annualized form is ARR (Annual Recurring Revenue), which is simply MRR × 12 — the two express the same recurring base on different cadences, so SaaS teams use MRR for operational tracking and ARR for board and investor framing. MRR is the heartbeat metric for subscription businesses.
What to watch
- Rising: Growth is coming from new customers (New MRR), existing customers upgrading (Expansion MRR), or both. Break down MRR by source to understand what's driving growth.
- Falling: Churn and downgrades are outpacing new business. Calculate Net MRR (New + Expansion − Churn − Contraction) to see the full picture.
In practice
A B2B SaaS company saw MRR grow 8% month-over-month, but when they decomposed it, 70% came from expansion revenue and only 30% from new sales. They doubled down on upsell features while rebuilding their top-of-funnel acquisition.
Illustrative scenario — a representative composite, not a specific company.
Related: ARPU — revenue per user.; NRR — revenue retention from existing customers.; Churn Rate — the leak in MRR.