Net New Monthly Recurring Revenue (Net New MRR) represents the overall change in a company’s monthly recurring revenue after accounting for new subscriptions, account upgrades, and customer churn within a specific month. It provides a clear view of whether your business is growing or shrinking in terms of recurring revenue.
Step 1: Calculate the New MRR, which is the total recurring revenue earned from new customers who started subscriptions during the month.
Step 2: Calculate the Expansion MRR, which includes additional recurring income from existing customers who upgraded their plans, added features, or expanded usage.
Step 3: Calculate the Churned MRR, which represents the recurring revenue lost due to customer cancellations or downgrades in the same month.
Step 4: Apply the formula to find Net New MRR:
Net New MRR = New MRR + Expansion MRR – Churned MRR
Example:
New MRR = $5,000
Expansion MRR = $2,000
Churned MRR = $1,500
Net New MRR = $5,000 + $2,000 – $1,500 = $5,500
Net New MRR = New MRR + Expansion MRR – Churned MRR
This formula helps assess how well a company is growing its recurring revenue base on a monthly basis.
Benchmark
A healthy SaaS business should aim to maintain a positive Net New MRR consistently. Positive figures indicate growth, while negative values signal revenue loss. While there is no universal target, consistently increasing Net New MRR over time is a strong indicator of product value, customer satisfaction, and go-to-market efficiency.
The monthly recurring revenue added from brand-new customers who begin their subscriptions within a specific month.
The increase in recurring revenue resulting from existing customers upgrading their plans or purchasing additional services.
The portion of recurring revenue lost in a month due to customers canceling their subscriptions or switching to lower-tier plans.
The total value of active subscription income received each month, excluding any gains from new sign-ups or losses from cancellations.
The rate at which customers discontinue their subscriptions over a given time frame, which contributes directly to revenue loss through churn.
A negative figure means that the revenue lost through cancellations or downgrades exceeded the gains from new and existing customers. It is a warning signal that retention or sales may need attention.
It should be tracked monthly, alongside MRR and churn metrics, to evaluate short-term revenue health and make timely adjustments.
No. While it is a strong leading indicator, it should be considered with other metrics like Customer Lifetime Value, Churn Rate, and CAC to get a full picture of business performance.