The same idea as ARR measured by month. Useful for a young company where a year-long view hides how quickly things are changing.
Why it matters
A yearly view of revenue hides recent change behind twelve months of history. MRR narrows the lens
to a single month, which is the difference between seeing a company as it was and seeing it as it
is right now. For a young or fast-moving business, that difference decides whether a fundraising
conversation is based on where things stand today or on a story from two quarters ago.
MRR matters most exactly where ARR is least trustworthy: early-stage companies with only a few
months of history, or any company going through a fast change — a new pricing model, a product
pivot, a large customer win or loss. Multiplying a single good or bad month by twelve produces an
ARR figure that looks precise and is not, and a monthly view is the corrective.
How it works
MRR follows the same inclusion rule as ARR — only revenue that is genuinely committed to repeat
counts — applied to a single month instead of a year.
Add up committed subscription revenue for the month. Every active customer's monthly
contract value, summed. A customer on an annual contract still contributes a monthly figure: their
annual fee divided across the months it covers, not counted in the month it happened to be
invoiced.
Break the movement into its parts. New MRR from new customers, expansion MRR from existing
customers upgrading, contraction MRR from customers downgrading, and churned MRR from customers
who leave. Reading these four separately explains far more than the single net number, because a
company can post flat or growing MRR while its underlying customer base is turning over
underneath it.
Multiply by twelve only with a caveat. MRR × 12 gives an annualised run rate, and it is a
useful shorthand, but it is only as reliable as the month it is built from. A company that just
signed one unusually large customer will show a run rate that overstates where the business is
actually headed, in either direction.
On GetDeal
A listing's Deep Dive tab presents a startup's revenue figures to buyers and investors, and for a
young company that can mean MRR shown alongside ARR rather than instead of it, since a single
annualised figure says less about a fast-changing early business. The AI analysis report reads
whichever recurring-revenue figures are provided when it builds its valuation range and
confidence scoring.
Get a free AI valuationthe in-product glossary — the same definitions, alongside your deals
Questions people ask
- Why look at MRR instead of ARR for an early-stage company?
- A company with only a few months of paying customers has no meaningful year of history to annualise, and its revenue is often changing quickly month to month as pricing, product and the customer base itself evolve. Looking at MRR shows the current trend directly instead of compressing a fast-changing few months into a single annualised figure that can mislead in either direction.
- Is MRR just ARR divided by twelve?
- Only as a rough conversion, not as a separate measurement. MRR should be built the same way ARR is, from committed recurring revenue for a single month, and then ARR can be derived by multiplying by twelve. Building the two independently, or from different definitions of what counts as recurring, is how a company ends up with two numbers that quietly disagree with each other.
- What do expansion and contraction MRR show that the net number does not?
- The net MRR change in a month can look healthy while hiding a business that is losing customers as fast as it wins them. Breaking the number into new, expansion, contraction and churned MRR shows whether growth is coming from new logos, from existing customers spending more, or is masking real losses underneath, which changes how durable that growth actually looks.
See also
More in Metrics
- ARR — The annualised value of subscription revenue that repeats — contracted and expected to continue.
- Burn rate — How much cash the company consumes each month.
- CAC — What it costs, on average, to win one customer — sales and marketing spend divided by customers gained.
- Churn — The rate at which customers or their revenue leave.
- EBITDA — A measure of operating profit that strips out financing, tax and accounting charges for past spending, so two businesses can be compared on how well the operations themselves earn..
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Updated 2026-09-09