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Monthly Recurring Revenue (MRR) is the total monthly value of a company’s customer contracts. MRR applies to subscription SaaS businesses, but is sometimes also used to refer to monthly revenue for companies with relatively consistent monthly revenue, like usage or transaction based SaaS businesses. For a given month x:

MRR = Sum of revenue from all customers in month x

SaaSGrid’s MRR chart breaks down MRR into subcomponents (this exercise is called growth accounting):

MRR = New MRR + Retained MRR + Expansion MRR + Resurrected MRR, where:

New MRR = Month x revenue from customers with no revenue prior to month x

Retained MRR = Month x revenue or month x-1 revenue (whichever is less) for each customer

Expansion MRR = Month x revenue - month x-1 revenue from non-new customers where month x revenue > month x-1 revenue

Resurrected MRR = Revenue from customers who are not new and had no revenue in month x-1

SaaSGrid’s MRR chart also breaks down lost MRR into its two components:

Contraction MRR = Month x-1 revenue - month x revenue from non-new customers where month x MRR < month x-1 MRR

Churned MRR = Month x-1 revenue from customers with no revenue in month x

For quarterly aggregation, the formulas are run on the last month of the period and multiplied by 3 to show Quarterly Recurring Revenue (QRR). For annual aggregation, the formulas are run on the last month of the period and multiplied by 12 to show a detailed view of ARR.