Formula
Expansion MRR = Σ (closing MRR − opening MRR)
for customers with MRR at both dates
whose MRR increased (at prior-month rates)Worked example
Illustrative figures. Customer F added a module worth 1,000 and reduced seats by 600 in the same month. The bridge shows one net movement of 400.
| Customer | History | MRR 31 Aug | MRR 30 Sep | Movement |
|---|---|---|---|---|
| Customer A | First contract | – | 4,000 | New business 4,000 |
| Customer B | Churned in March | – | 2,500 | Reactivation 2,500 |
| Customer C | Since 2024 | 3,000 | 4,200 | Expansion 1,200 |
| Customer D | Since 2025 | 5,000 | 3,500 | Contraction (1,500) |
| Customer E | Since 2023 | 2,000 | – | Churn (2,000) |
| Customer F | Module +1,000, seats −600 | 6,000 | 6,400 | Expansion 400 |
| Total | 16,000 | 20,600 | 4,600 |
Expansion MRR = 1,200 + 400 = 1,600
Sources of expansion
- Additional seats, users or units.
- Upgrade to a higher plan or tier.
- Cross-sell of another product to the same customer.
- Contracted price increases and ramp steps, as they take effect.
- Removal of a discount at renewal.
Price and volume
Expansion from contracted uplifts is a price effect; expansion from seats and products is a volume effect. Separating the two shows whether net revenue retention depends on price increases that customers may resist at renewal.
Timing
Expansion is recorded in the month the higher price or quantity takes effect, not in the month the amendment is signed.
How Revnewed calculates it
Expansion is the net increase for a customer with MRR at both month ends, measured at the prior month’s rates. A currency movement on an unchanged contract is never expansion.
The overview and the board pack list the month’s largest gains by customer, with the movement type.
Common misstatements
- Currency gains as expansion
- An unchanged euro contract is worth more in dollars when the dollar weakens. That is FX impact.
- Line-level gross expansion
- Adding new lines without netting reductions for the same customer overstates both expansion and contraction.
- Amendments counted at signature
- A seat increase effective next quarter is expansion next quarter.