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Business TermMRR

月次経常収益(MRR)

Monthly Recurring Revenue (MRR) / マンスリー・リカーリング・レベニュー

Monthly recurring revenue (MRR) is recurring subscription revenue normalized to a monthly amount. It reveals growth, expansion, contraction, and churn faster than ARR.

Formula
MRR = sum of active monthly recurring revenue
Use when
Detects operating changes earlier than ARR.
Watch out
Monthly plans, annual contracts divided by 12, recurring seats, recurring plan upgrades
Updated: 2026. 05. 14.Quality: ReviewedSources: 3
What it means

Monthly recurring revenue (MRR) is the monthly value of active recurring contracts. Monthly plans are counted directly, annual contracts are usually divided by 12, and one-time services or temporary usage spikes are excluded. MRR is the monthly operating view behind ARR, making pricing, onboarding, churn, and expansion changes visible sooner.

How to calculate it

MRR sums active recurring revenue normalized to a monthly basis. Operators usually explain movement through a New, Expansion, Contraction, and Churn MRR bridge. Basic formula | MRR = sum of active monthly recurring revenue | Measures the current monthly recurring base Annual contract | annual contract value / 12 | Normalizes different billing periods MRR bridge | starting MRR + New MRR + Expansion MRR - Contraction MRR - Churn MRR = ending MRR | Explains what changed

LensFormula / treatmentWhen to use it
Basic formulaMRR = sum of active monthly recurring revenueMeasures the current monthly recurring base
Annual contractannual contract value / 12Normalizes different billing periods
MRR bridgestarting MRR + New MRR + Expansion MRR - Contraction MRR - Churn MRR = ending MRRExplains what changed
What counts / what does not

MRR should represent recurring monthly revenue, not cash collected or total recognized revenue. Include | Monthly plans, annual contracts divided by 12, recurring seats, recurring plan upgrades | They repeat monthly Exclude | Setup fees, one-time services, taxes, refunds, temporary overages, cash collections | They are not the recurring base Define carefully | Mid-month starts, discounts, dormant accounts, usage-based revenue, contracted but unbilled revenue | Company policy can vary

ItemTreatmentWhy it matters
IncludeMonthly plans, annual contracts divided by 12, recurring seats, recurring plan upgradesThey repeat monthly
ExcludeSetup fees, one-time services, taxes, refunds, temporary overages, cash collectionsThey are not the recurring base
Define carefullyMid-month starts, discounts, dormant accounts, usage-based revenue, contracted but unbilled revenueCompany policy can vary
What moves the number

MRR moves with new customers, expansion, downgrades, churn, and pricing changes. New MRR | New customers increase MRR | Read with CAC and sales productivity Expansion MRR | Existing customers add seats or upgrade | Shows product value and upsell potential Contraction MRR | Existing customers downgrade or reduce seats | Signals adoption or value issues Churn MRR | Cancellations reduce MRR | Shows recurring revenue leakage

DriverMetric impactWhat to watch
New MRRNew customers increase MRRRead with CAC and sales productivity
Expansion MRRExisting customers add seats or upgradeShows product value and upsell potential
Contraction MRRExisting customers downgrade or reduce seatsSignals adoption or value issues
Churn MRRCancellations reduce MRRShows recurring revenue leakage
When it helps

Detects operating changes earlier than ARR. Shows whether the team should prioritize acquisition, expansion, or churn reduction. Sets the revenue baseline for hiring, marketing, and customer success investment.

  • Detects operating changes earlier than ARR.
  • Shows whether the team should prioritize acquisition, expansion, or churn reduction.
  • Sets the revenue baseline for hiring, marketing, and customer success investment.
How to use it
  • MRR is normalized recurring revenue, not cash collected.
  • ARR is the annual lens; MRR is better for monthly movement.
  • An MRR bridge explains why the number changed.
  • One-time revenue distorts MRR growth and churn analysis.
  • Discount and mid-period rules need a written company definition.
Decision cautions

MRR is useful for operations, but it does not directly prove profitability or cash collection. Growing MRR can still be unhealthy if gross margin or CAC payback is poor. Do not confuse annual prepayment or billing timing with MRR. Usage-based revenue needs clear separation between committed recurring revenue and temporary overage.

  • Growing MRR can still be unhealthy if gross margin or CAC payback is poor.
  • Do not confuse annual prepayment or billing timing with MRR.
  • Usage-based revenue needs clear separation between committed recurring revenue and temporary overage.
Read with

Read MRR with ARR, churn, NRR, ARPU, and CAC. ARR | Annual recurring revenue | Converts the same base into annual planning Churn Rate | Customer or revenue loss | Shows leakage from MRR NRR | Existing-customer revenue retention | Shows whether MRR grows without new customers ARPU / CAC | Price level and acquisition cost | Explains growth quality and efficiency

MetricRoleWhy read together
ARRAnnual recurring revenueConverts the same base into annual planning
Churn RateCustomer or revenue lossShows leakage from MRR
NRRExisting-customer revenue retentionShows whether MRR grows without new customers
ARPU / CACPrice level and acquisition costExplains growth quality and efficiency
Example

A SaaS company starts the month with $500k MRR. It adds $60k of New MRR and $25k of Expansion MRR, but loses $15k to contraction and $40k to churn. Ending MRR is $530k. The headline is positive, but the bridge shows existing-customer leakage is meaningful, so leaders prioritize onboarding and large-account adoption rather than only adding more sales capacity.

Compare with

MRR | Monthly recurring revenue | Tracks short-cycle movement ARR | Annual recurring revenue | Better for annual planning and investor communication Revenue | Accounting revenue in a period | Can include non-recurring items and recognition timing Bookings | Contracted order value | Does not separate recurring from one-time value CMRR | Contracted future MRR | Includes scheduled known changes

MetricDifferenceWhy read together
MRRMonthly recurring revenueTracks short-cycle movement
ARRAnnual recurring revenueBetter for annual planning and investor communication
RevenueAccounting revenue in a periodCan include non-recurring items and recognition timing
BookingsContracted order valueDoes not separate recurring from one-time value
CMRRContracted future MRRIncludes scheduled known changes
Common mistakes
  • MRR equals cash collected this month. Annual prepayments and collections timing should be tracked separately.
  • MRR growth proves health. High churn or contraction can make the growth fragile.
  • Annual contracts should be counted fully in MRR. They are normally divided by 12.
Frequently asked questions
How should annual contracts be counted in MRR?

Usually divide the annual recurring contract value by 12. MRR should reflect normalized recurring revenue, not invoice timing.

Do setup fees count as MRR?

Usually no. They are non-recurring and should be kept outside the recurring revenue base.

Should I use MRR or ARR?

Use MRR for monthly operations and ARR for annual planning or external communication. Both should come from the same recurring revenue definition.

Sources
SourcesKindLink
OpenStax: Principles of MarketingTier-S open textbookOpen
Wikipedia: Revenue streamRecurring revenue referenceOpen
Wikipedia: Subscription business modelSubscription model referenceOpen