metricaas

Recurring revenue and billing

How to measure and break down the revenue that recurs every month in your SaaS.

10 terms

Illustration of monthly recurring revenue: a calendar with revenue bars that repeat every month.

MRR

MRR (Monthly Recurring Revenue) is the monthly recurring revenue of a SaaS: the sum of all active subscriptions normalized to a month. It is the core metric of a subscription business because it shows, predictably, how much the company earns on a recurring basis each month, without counting one-off charges.

Illustration of annual recurring revenue: twelve months of recurring revenue summed into an annual total.

ARR

ARR (Annual Recurring Revenue) is the annual recurring revenue of a SaaS: MRR multiplied by 12. It represents how much the company earns on a recurring basis over a year, counting only active subscriptions, with no one-off charges. It is the metric of choice for companies selling annual contracts and the standard language of investors.

Illustration of MRR movements: arrows adding new and expansion revenue and subtracting contraction and churn from a monthly total.

MRR Movements

MRR movements are the breakdown of the monthly change in MRR into its causes: new, expansion, contraction, churn and reactivation MRR. Instead of watching only the final number, you separate every dollar that came in and every dollar that left, and see why recurring revenue grew, stalled or fell. The sum of all movements is the net new MRR for the period.

Illustration of Committed MRR: current MRR adjusted for contracted additions and certain losses forming committed recurring revenue.

Committed MRR (CMRR)

Committed MRR (CMRR) is the committed monthly recurring revenue of a SaaS: it starts from current MRR, adds the contracts already signed that are still due to activate, and subtracts the losses that are already certain, such as cancellations customers have already announced. It is a more realistic view of future recurring revenue than the MRR of the current month, because it factors in what is already closed but not yet reflected in the current number.

Illustration of run rate: revenue from a recent period stretched across the twelve months of a year.

Run rate

Run rate is annualized revenue projected from a recent period, for example one month of MRR multiplied by 12 or a quarter of revenue multiplied by 4. It extrapolates the current pace of the business as if it would stay constant for a year. It is useful for a quick read of scale, but dangerous when the period used is not representative.

Illustration of average revenue per user: recurring revenue split across several users, each with its average value.

ARPU

ARPU (Average Revenue Per User) is the average recurring revenue per user of a SaaS: recurring revenue divided by the number of active users. Unlike ARPA, which divides by account, ARPU looks at the person, which makes sense in products priced per seat. It is a measure of how much each user is worth, on average, each month.

Illustration of ARPA: total recurring revenue split across active accounts, revealing the average value per account.

ARPA

ARPA (Average Revenue Per Account) is a SaaS recurring revenue divided by the number of active accounts. It shows how much each account generates, on average, per month or year. It is the metric that reveals the typical value of a customer and one of the main levers for growing revenue without relying only on new sales.

Illustration of gross merchandise value: several marketplace transactions summed into a total moved in the period.

GMV

GMV (Gross Merchandise Value) is the total value of the transactions flowing through a platform or marketplace in a period. It is not the company revenue: revenue is the take rate charged on that volume. It is the scale metric of marketplaces and transactional SaaS, showing the size of the flow the business moves.

Illustration of gross and net revenue: the total billed on one side and the real revenue the company keeps on the other.

Gross vs net revenue

Gross revenue is the total billed in a period, before any deduction; net revenue is what remains after discounts, refunds, gateway fees and taxes. Gross shows the size of billing, while net reveals the real revenue the company keeps and that funds its margin. In a SaaS, separating the two avoids overstating growth and distorting revenue recognition.

Illustration of non-recurring revenue: one-off setup and service charges separated from recurring subscriptions.

Non-recurring revenue

Non-recurring revenue is the revenue from one-off, non-repeatable items of a SaaS, such as setup, implementation, professional services and training. It stays out of MRR and ARR because it does not renew: it inflates total billing, but not recurring revenue. That is why it should be measured and recorded separately from subscriptions.