How to build an MRR bridge
Start with opening MRR and add each movement.
1
Enter starting MRR
Use the recurring revenue active at the start of the month.
2
Add new and expansion
Separate new logos from upsells to see what drives growth.
3
Subtract churn and contraction
Include downgrades as contraction rather than churn.
What does this tool do?
Monthly recurring revenue is the normalized monthly value of active subscriptions. Tracking its components, new, expansion, contraction and churn, explains whether growth comes from acquisition or from keeping and growing existing accounts.
The Formula
Ending MRR = Starting MRR + New + Expansion − Churned − ContractionFrequently Asked Questions
What is the difference between gross and net new MRR?
Gross new MRR is new customers only. Net new MRR also includes expansion, contraction and churn, so it shows the actual change in recurring revenue.
How should annual plans be counted in MRR?
Divide the annual contract value by 12 and recognize that monthly amount. Cash collected upfront does not change the monthly recurring figure.