MRR (Monthly Recurring Revenue)

MRR (Monthly Recurring Revenue) is the normalised monthly subscription revenue of a SaaS or recurring revenue business — the real-time tracking metric for subscription health. It equals ARR / 12, or the direct sum of active monthly contracts. Its decomposition into New MRR (new customers), Expansion MRR (upsell/cross-sell), Contraction MRR (downgrades) and Churned MRR (cancellations) provides a granular view of growth drivers and churn dynamics. In SaaS valuation and due diligence, MRR waterfall analysis over 12–24 months reveals the underlying growth quality and predictability of the recurring revenue base.

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Example: a Swiss SaaS company presents MRR of CHF 350,000 (ARR: CHF 4.2 million). Monthly MRR decomposition: New MRR +CHF 48,000, Expansion MRR +CHF 22,000, Contraction MRR -CHF 8,000, Churned MRR -CHF 14,000 = net MRR growth of +CHF 48,000/month (+13.7% annualised). This organic MRR growth rate, against a sector median of 8%, supports a premium valuation multiple versus less efficient peers.

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Hectelion analyses MRR decomposition as a leading indicator of SaaS growth quality in every subscription business valuation and due diligence mandate.