MRR (Monthly Recurring Revenue) is the total subscription revenue a company can count on receiving every month from customers who are actively paying, excluding one-time fees or non-recurring income. It’s the core health metric for any subscription (SaaS) business, because unlike a lump-sum sale, MRR compounds — new customers add to it, upgrades expand it, downgrades and cancellations shrink it, and the net of all of that each month tells you whether the business is genuinely growing.

Investors and founders break MRR down into components — new MRR, expansion MRR (existing customers paying more), contraction MRR, and churned MRR — because two companies with identical total MRR can have very different underlying health depending on how much of their growth is offset by customers leaving or downgrading.

MRR is usually only meaningful for businesses with genuinely recurring subscription revenue; applying it to a business built mostly on one-time transactions or project fees can create a misleading picture of stability that doesn’t actually exist.

🇵🇭 Philippine Example

Sprout Solutions, a Philippine HR and payroll technology company, has publicly discussed crossing $10 million in annual recurring revenue in 2023 — which, broken down across twelve months, reflects roughly the scale of monthly recurring revenue a maturing Philippine SaaS business can reach with enterprise and corporate clients.

Related Terms