Monthly Recurring Revenue (MRR)

What Is Monthly Recurring Revenue (MRR)?

MRR (Monthly Recurring Revenue) is the lifeblood of SaaS businesses. It's the predictable revenue from active subscriptions each month. Unlike traditional software with lumpy sales, SaaS businesses have smooth, predictable revenue. MRR growing 5-10% monthly indicates a healthy SaaS business. MRR is used to calculate growth rates and project future revenue.

MRR includes all active subscription revenue, excluding discounts and refunds. Tracking MRR trends reveals business health: growing MRR indicates product-market fit and effective sales; declining MRR indicates churn (customer loss) exceeding new customer acquisition. MRR can be broken down by customer cohort, product tier, or acquisition channel, revealing which segments are healthy.

Gross MRR (total subscription revenue) and net MRR (after refunds/discounts) are tracked separately. Net Revenue Retention (NRR) measures how much existing customers increase spending (expansion) versus reduce spending (contraction and churn). NRR above 100% indicates expansion revenue exceeding churn—a sign of strong product-market fit.