Quick answer
Learn how to calculate MRR growth rate from net new MRR and starting MRR, with examples for SaaS planning.
Core formulas
Net new MRR = new MRR + expansion MRR - contraction MRR - churned MRR
Net new MRR is the amount added after recurring revenue losses.MRR growth rate = net new MRR / starting MRR
Use starting MRR as the denominator for the period.Ending MRR = starting MRR + net new MRR
Ending MRR can then be annualized into ARR if needed.Worked example
MRR growth rate example
- Starting MRR is $32,000.
- New MRR is $4,800 and expansion MRR is $1,200.
- Contraction MRR is $600 and churned MRR is $1,400.
Why growth rate needs a bridge
A single growth percentage can be misleading. Two companies can both grow 10% MRR, but one may be growing from healthy expansion while the other is replacing heavy churn with expensive new acquisition.
The MRR movement bridge explains what created the growth rate. That is why net new MRR, expansion, contraction and churn should sit beside the final percentage.
How to compare periods
Compare growth rate using consistent time periods. Monthly MRR growth should not be directly compared with quarterly growth unless you annualize or normalize the timing. Also be careful with very small starting MRR, where small dollar changes can create large percentages.
- Use the same period length when comparing growth rates.
- Show both dollar net new MRR and percentage growth.
- Segment by channel or customer type when the mix changes.
How to use it for planning
Use MRR growth rate to build base, upside and downside scenarios. Then compare the resulting revenue with runway. Fast growth that consumes cash too quickly can still be risky.
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FAQ
Is MRR growth rate the same as revenue growth rate?
Not always. MRR growth rate focuses on normalized recurring revenue. Total revenue growth can include services, one-time fees and cash timing.
What if starting MRR is zero?
A percentage growth rate is not meaningful from zero. Use net new MRR or ending MRR until there is a recurring base.
Should expansion be included in MRR growth?
Yes. Expansion MRR is part of recurring revenue growth, but track it separately so you understand where growth came from.