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. 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.
Related: ARPU — revenue per user.; NRR — revenue retention from existing customers.; Churn Rate — the leak in MRR.