SaaS metrics, defined the way finance closes them
How each number Revnewed reports is calculated, with a worked example and the mistakes that make board numbers move. The same definitions run in the product, the exports and the board pack.
- Monthly recurring revenue (MRR)
- Monthly recurring revenue (MRR) is the recurring revenue your live contracts earn in a month. Annual and multi-year prices are normalised to a monthly amount, and one-time fees are left out.
- Annual recurring revenue (ARR)
- Annual recurring revenue (ARR) is the yearly run rate of the recurring contracts live today. For a SaaS company that reports monthly, it is month-end MRR multiplied by twelve.
- MRR bridge
- An MRR bridge explains how MRR moved from the start of a month to the end. It splits the change into new business, expansion, reactivation, contraction, churn and currency, so that opening MRR plus every movement equals closing MRR. Multiply each line by twelve and it becomes an ARR bridge.
- Net revenue retention (NRR)
- Net revenue retention (NRR) shows how much recurring revenue you have today from the customers you had twelve months ago, including their upgrades, downgrades and losses. New customers are excluded. Above 100% means existing customers grew more than they shrank.
- Gross revenue retention (GRR)
- Gross revenue retention (GRR) measures how much of last year’s recurring revenue you kept from existing customers, with upgrades ignored. It can never exceed 100%, so it shows losses that strong expansion can hide in NRR.
- Churn rate
- Churn measures what you lose. Logo churn counts customers who leave. Revenue churn counts MRR: gross MRR churn includes downgrades and cancellations, and net MRR churn subtracts expansion, so it can be negative.
- Contracted ARR (CARR)
- Contracted ARR (CARR) is live ARR plus the ARR of signed contracts that start later. Sales-led companies often sign weeks or months before go-live, and CARR shows that committed revenue without overstating today’s run rate.
- FX impact and constant currency
- When customers pay in several currencies, exchange-rate moves change reported MRR even when no contract changed. Measuring movements at last month’s rates and reporting the difference as FX impact keeps growth and retention about customers rather than currency.
- Month-end close for SaaS metrics
- Closing SaaS metrics means fixing the month’s ARR, bridge and retention once they have been reviewed, the same way the books are closed. The board then sees figures that will not change without an explanation.
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