What it is
MRR (Monthly Recurring Revenue) and ARR (Annual Recurring Revenue) measure the predictable, subscription-based income a company earns. They're the heartbeat metric of SaaS.
Facts
- ARR = MRR x 12.
- Only recurring revenue counts, one-off setup fees and professional services are excluded.
- Net New MRR = New + Expansion - Churned - Contraction MRR.
- Net Revenue Retention (NRR) above 100% means existing customers grow spend faster than they churn.
Who it's for
Subscription and SaaS founders tracking growth and pitching investors.
How it helps you
Recurring revenue makes income predictable, so you can forecast runway, plan hiring, and demonstrate durable growth to investors.
Caveats
Don't inflate MRR by including one-time fees or annual prepayments as if monthly. Normalize annual contracts to a monthly figure to keep MRR honest.
Conclusion
MRR/ARR is the pulse of a subscription business; keep it to genuinely recurring revenue and watch net retention as the truest sign of health.