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
- Track new, expansion, churned and contraction MRR separately.
- Plot net new MRR by month on a chart you review weekly.
- 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.