What is MRR?
MRR is a core concept in modern B2B revenue. Here is a clear, accurate definition, why it matters, and how Ardovo handles it.
Short answer
MRR, or monthly recurring revenue, is the predictable subscription revenue a business earns each month from active customers. It is the monthly counterpart to ARR and is favored by teams that bill or grow month to month. MRR is tracked with its moving parts: new, expansion, contraction, and churned.
Key takeaways
- Predictable subscription revenue earned each month.
- The monthly counterpart to ARR (ARR divided by twelve).
- Broken into new, expansion, contraction, and churned MRR.
- Ideal for tracking fast, month-to-month movement.
Why it matters
MRR shows momentum in near real time. Splitting it into new, expansion, contraction, and churn reveals whether growth comes from winning customers or keeping and expanding them.
How Ardovo handles it
Ardovo computes MRR and its components from live billing and deal data, so you see new, expansion, contraction, and churned movement each month. Rook flags contraction and churn trends before they compound.
Frequently asked questions
What are the components of MRR?
New MRR from new customers, expansion MRR from upsells and cross-sells, contraction MRR from downgrades, and churned MRR from cancellations. Net new MRR is the sum of these, positive or negative.
What is the difference between MRR and ARR?
They measure the same recurring revenue over different periods. MRR is monthly; ARR is annual, roughly MRR times twelve. Monthly-billing businesses favor MRR; annual-contract businesses favor ARR.