MRR (Monthly Recurring Revenue)

Definition

Monthly Recurring Revenue (MRR) is the predictable, normalized revenue a subscription business earns each month. It's the foundation metric for SaaS and subscription businesses.

MRR Components

• New MRR: Revenue from new customers acquired this month.
• Expansion MRR: Additional revenue from existing customers (upgrades, add-ons).
• Contraction MRR: Revenue lost from existing customers (downgrades).
• Churned MRR: Revenue lost from customers who cancelled.

Net New MRR = New + Expansion − Contraction − Churn

Why It Matters

MRR is the best predictor of a subscription business's health. It's more reliable than total revenue (which includes one-time payments) and more actionable than ARR (which smooths out monthly changes). Investors look at MRR growth rate as a primary indicator of product-market fit.

How CentSight Helps

CentSight calculates MRR and all its components automatically from your QuickBooks data. Track new, expansion, contraction, and churned MRR in real time. Ask: “What's our MRR growth rate over the last 6 months?” or “How much MRR did we lose to churn this quarter?”