Also called: MRR
Monthly recurring revenue (MRR) is the value of a subscription business's recurring revenue normalized to a one-month period, the same measurement as ARR but on a monthly cadence, more common at earlier-stage or lower-ACV companies.
MRR is ARR's monthly counterpart. Divide ARR by twelve, or build it up directly from monthly subscription values, and the result is MRR. It's the more common metric at companies with lower average contract values and shorter sales cycles, where month-to-month movement is visible enough to be worth tracking directly instead of only looking at the annualized figure.
MRR breaks down into the same movement types as ARR: new MRR from new customers, expansion MRR from upsells, contraction MRR from downgrades, and churned MRR from cancellations. Tracking net new MRR month over month can surface a slowdown or an acceleration well before it would show up clearly in an annual figure.
MRR is also more sensitive to short-term noise than ARR. A single large contract landing or leaving in one month can swing the number meaningfully, which is why most teams smooth it with a trailing average before reading a trend into a single month's change.
Comparing MRR across companies with very different contract lengths can mislead. A company selling only annual contracts and reporting MRR is just dividing its ARR by twelve, not measuring real month-to-month subscription behavior the way a true monthly-billing business would.
A single month's MRR swing gets read as a trend before it's confirmed by a second or third month. One large contract landing or churning can move the number enough to look like a pattern that isn't actually there yet.
Tell us how your motion runs today. We'll show you what we'd engineer.
Contact us