MRR is short for Monthly Recurring Revenue, which is calculated using subscriptions or a predictable revenue stream (plans for this post). It excludes one time payments, discounts, refunds or non contracted revenue. Since MRR reports revenue across dissimilar plan terms, reporting can challenging. We automatically account for these challenges with our a proprietary algorithm that normalizes the contributing elements used to calculate MRR. Also, since we integrate directly with payment providers and can calculate MRR in real time, we report REAL MRR, not theoretical (link) Since this is a key metric on the current performance of your business, we want it to be as accurate as possible.
Here’s how we calculate it: MRR = (ARR(Normalized)) + (Plans(Normalized))
It is important to note that MRR is not GAAP Revenue. The difference tends to cause confusion for many organization and their finance departments.
To ensure clear business discussions, we’d suggest using the term “GAAP Revenue” for discussions relating to accounting and income performance, and “MRR” for subscription metrics and analytics.