MRR is the predictable monthly revenue from all active subscriptions, normalized to a monthly amount.
Monthly Recurring Revenue (MRR) is the heartbeat of subscription businesses. It's the most important metric to track daily/weekly because it shows business health in real-time. MRR is "normalized"—if someone pays $1,200 annually, that's $100 MRR. Unlike total revenue (which includes one-time payments), MRR only counts predictable, recurring subscription revenue. There are multiple types of MRR to track: New MRR (from new customers), Expansion MRR (upgrades/upsells), Churned MRR (cancellations), and Reactivation MRR (customers who return). Net New MRR = New + Expansion + Reactivation - Churned MRR. This is the number that should grow every month. If Net New MRR is negative (churn exceeds new revenue), you're shrinking.
MRR = Sum of all monthly subscription values OR MRR = (Annual Subscriptions / 12) + Monthly SubscriptionsHit $10M ARR ($833K MRR) in 2018 and crossed $100M ARR ($8.3M MRR) by 2022. Their MRR growth was driven primarily by expansion revenue—existing customers upgrading as they scaled, not just new customer acquisition.
Reached $100M ARR ($8.3M MRR) in 2020 with 11M+ developers. Their MRR growth was exceptional (tripling YoY) because of strong network effects—more developers using it made it more valuable for teams. 98% of revenue was self-serve, automated MRR.
Crossed $2M MRR ($24M ARR) in 2020 before raising Series A. Their MRR growth was viral—140% net revenue retention meant existing teams were expanding seats and upgrading plans faster than churn. Purely bottom-up, product-led growth.
MRR is your company's pulse—if MRR is growing healthily (10%+ month-over-month), you're building a sustainable business. If MRR is flat or declining, you have a churn problem or acquisition problem. MRR also helps with forecasting: if you have $100K MRR and 5% churn, you know you'll have $95K next month even with zero sales. This predictability lets you plan hiring, marketing spend, and runway. For fundraising, investors care most about MRR growth rate—doubling MRR every 4-6 months is Series A-ready.
Pre-PMF: 15-30% MoM. Post-PMF: 10-20% MoM. Mature companies: 5-10% MoM. If you're below 5% MoM, you're not growing fast enough for VC funding (but might be fine for bootstrapping). Exceptional is 30%+ MoM sustained for 12+ months.
Depends on team size and burn rate. Solo founder: $10-20K MRR with 80% margin = $8-16K take-home. Small team (3-5 people): $50-100K MRR needed. VC-backed team (10+ people): $200K+ MRR to cover salaries and burn before profitability.
If churn >5% monthly, fix churn first. If churn <3%, focus on growth. Why? Because growing MRR with high churn is like filling a leaky bucket—you'll never build momentum. Fix the leak, then pour in more water.
Yes, if Churned MRR > (New MRR + Expansion MRR). This is a crisis signal—it means you're losing customers faster than gaining them. Immediately focus on retention and understanding why customers are leaving. Negative MRR growth is acceptable only during a planned pivot.
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