How to calculate churned MRR
Churned MRR isolates the recurring revenue lost specifically to full cancellations. It is one of the four components of the MRR bridge and a direct input to revenue churn and net new MRR.
The key distinction is from contraction MRR. Churned MRR is revenue from customers who left entirely; contraction MRR is revenue lost from customers who downgraded but stayed. Keeping them separate clarifies where losses come from.
- MRR of cancelled customers The formula
- Full cancellations only Excludes downgrades
- MRR bridge One of four components
Short answer
Churned MRR is the monthly recurring revenue lost from customers who cancelled entirely in a period. Sum the MRR of every customer who fully churned. If three customers paying 2,000, 3,000, and 1,000 dollars a month cancelled, churned MRR is 6,000 dollars. It excludes downgrades, which count as contraction MRR, a separate component.
Step by step
Identify fully churned customers
Find customers who cancelled entirely in the period, as opposed to those who merely downgraded.
Sum their MRR
Add the monthly recurring revenue each churned customer was paying before they left. That total is churned MRR.
Keep contraction separate
Do not include downgrades here; revenue lost from customers who stayed but shrank is contraction MRR, a distinct component.
Use it in the MRR bridge
Churned MRR feeds net new MRR (new plus expansion minus contraction minus churn) and revenue churn rate. Track it alongside the other components.
Worked example
In the month, four customers cancelled entirely, paying 1,500, 2,500, 800, and 1,200 dollars a month. Churned MRR = 1,500 plus 2,500 plus 800 plus 1,200 = 6,000 dollars.
Separately, two customers downgraded, losing 1,000 dollars of MRR between them; that is contraction MRR, not churn. Keeping them apart shows that 6,000 dollars left through cancellations and 1,000 dollars through downgrades, a clearer picture than lumping them together.
How Ardovo handles it
Ardovo computes churned MRR separately from contraction MRR in its live MRR bridge, so you see exactly how revenue was lost. Rook flags a spike in churned MRR the moment it appears and identifies which segment or cohort it came from.
Frequently asked questions
What is churned MRR?
The monthly recurring revenue lost from customers who cancelled entirely in a period. Sum the MRR of every fully churned customer. It excludes downgrades, which count as contraction MRR, a separate component of the MRR bridge.
What is the difference between churned MRR and contraction MRR?
Churned MRR is revenue lost from customers who cancelled entirely; contraction MRR is revenue lost from customers who downgraded but stayed. Keeping them separate clarifies whether losses come from departures or shrinking accounts.
How does churned MRR fit into other metrics?
It is a component of net new MRR (new plus expansion minus contraction minus churn) and a driver of revenue churn rate. Tracking it alongside the other MRR bridge components shows exactly how recurring revenue moved.