What is Monthly Recurring Revenue (MRR)?
The normalized monthly value of all active subscriptions - the heartbeat metric of any subscription business.
Monthly Recurring Revenue (MRR): definition
MRR strips out one-time fees and normalizes every plan to a monthly figure so you can see the recurring core of the business and how it changes. Its power is in the movements - new, expansion, contraction, and churned MRR - which together explain growth far better than a single revenue number.
- New MRR: from newly acquired customers
- Expansion MRR: upgrades and upsells from existing customers
- Contraction MRR: downgrades that reduce recurring revenue
- Churned MRR: revenue lost from cancellations
- Net new MRR = New + Expansion − Contraction − Churn
How Fintra handles it
Fintra derives MRR and its components from the same billing and revenue data that runs the ledger, so the metric ties back to recognized revenue rather than living in a disconnected dashboard. New, expansion, contraction, and churned MRR are broken out automatically, and forecasts read the live figures.
Worked example
| Movement | Amount | Running MRR |
|---|---|---|
| Starting MRR | - | $100,000 |
| New | +$8,000 | $108,000 |
| Expansion | +$4,000 | $112,000 |
| Contraction | −$1,500 | $110,500 |
| Churn | −$3,000 | $107,500 |
Frequently asked questions
How do you calculate MRR?
Normalize every active subscription to a monthly amount and sum them. An annual plan billed at $12,000 contributes $1,000 of MRR. Exclude one-time fees. The more useful view is the MRR bridge - new, expansion, contraction, and churn - which explains the change.
What is the difference between MRR and revenue?
MRR is a normalized run-rate of recurring subscriptions at a point in time; recognized revenue is what lands on the income statement for a period under ASC 606. They are related but not identical - usage fees, one-time charges, and timing make GAAP revenue differ from MRR.
What is net new MRR?
Net new MRR = New + Expansion − Contraction − Churn for the period. It is the single number that tells you whether the recurring base grew or shrank, and it is far more informative than the ending MRR alone.
How does Fintra calculate MRR?
Fintra derives MRR and its movement components from the billing and revenue data on the shared ledger, so the metric reconciles to recognized revenue and deferred revenue rather than living in a separate, drift-prone spreadsheet.
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