What is Monthly Recurring Revenue (MRR)?
Monthly recurring revenue (MRR) is the predictable, recurring revenue a company earns each month from active subscriptions, and it's the building block of ARR (MRR x 12).
MRR normalizes all subscription revenue into a monthly figure, making it easy to track growth, churn, and expansion on a month-over-month basis. While ARR gets the board-level attention, MRR is the operational metric that sales and finance teams use for granular tracking.
Types of MRR
There are five components of MRR that CROs track. New MRR comes from first-time customers. Expansion MRR comes from upsells and cross-sells to existing accounts. Reactivation MRR comes from previously churned customers who return. Contraction MRR is revenue lost from downgrades. Churned MRR is revenue lost from cancellations. Net New MRR = New + Expansion + Reactivation - Contraction - Churned.
MRR vs ARR
ARR = MRR x 12. Simple math, but the nuance matters. MRR is better for tracking monthly trends, identifying seasonal patterns, and measuring the immediate impact of new hires or campaigns. ARR is better for board reporting, valuation, and long-term planning. Most SaaS companies below $10M ARR track MRR as their primary metric, then shift to ARR as the primary frame when they reach scale.
MRR Growth Rate Benchmarks
Healthy SaaS companies target 10-20% month-over-month MRR growth in the early stages (pre-$1M ARR), 5-10% in the growth stage ($1M-$10M ARR), and 3-5% at scale ($10M+ ARR). A company growing MRR at 10% monthly will roughly triple its revenue in a year. CROs use MRR growth rate to assess whether their team is on pace and where to invest additional resources.
Get Weekly Sales Intelligence
Join 500+ sales executives getting compensation data, market trends, and career intelligence.
Subscribe Free