Monthly Recurring Revenue (MRR)

Description:

Monthly Recurring Revenue shows how much revenue you collected from subscriptions. There are several variations of MRR, like Committed MRR (CMRR). It is non-GAAP metric, so analytics apps may calculate it differently.

Use:

Assess SaaS business month-to-month performance. Calculate all other SaaS metrics. Calculate recurring profit. Create projections to estimate future performance.

Why we need it:

When different length subscriptions are offered, bookkeeping stops reflecting true business performance. MRR normalizes the revenue so that the time aspect of subscriptions becomes visible.

Affects:

All SaaS metrics

Formula:

No single formula. How FirstOfficer.io calculates MRR is explained in Calculation Principles article.

Variations:

Some businesses choose to include recurring but non-contracted revenue to MRR. They then use term Contracted MRR to denote the real MRR which excludes any single purchases. FirstOfficer.io only includes contracted revenue to MRR.

Also Called:

Contracted Monthly Recurring Revenue.