Formula
opening MRR last month’s MRR at last month’s rates + new business first MRR a customer ever has + expansion increase for an existing customer + reactivation MRR returns after a month end at zero − contraction decrease for a customer who stays − churn customer goes to zero ± FX impact change caused only by exchange rates = closing MRR
Worked example
Figures from the sample company in every trial. Northwind Analytics (sample). Movements at August rates; the FX line carries the rest.
| Line | USD |
|---|---|
| Opening MRR, 31 Aug | 147,708 |
| New business | 460 |
| Expansion | 13,201 |
| Reactivation | – |
| Contraction | – |
| Churn | (870) |
| FX impact | 614 |
| Closing MRR, 30 Sep | 161,113 |
Classify movements per customer
If a customer upgrades one product and downgrades another in the same month, the bridge should show one net movement for that customer. Classifying line by line reports expansion and contraction the customer never experienced and makes gross churn look worse than it is.
Measure movements at last month’s rates
When contracts are billed in more than one currency, a customer whose contract did not change can still show a different MRR in your reporting currency. Measuring every movement at last month’s rates, and putting the remainder on an FX line, keeps expansion and churn about customers.
Bridges across several months
A quarterly or annual bridge is the sum of the monthly bridges. If a closed month has changed since it was reported, show the difference as a restatement line rather than letting the opening figure drift from what the board saw.
How Revnewed calculates it
The bridge is built from dated contract facts for every customer and month. Movements are measured at last month’s rates, and the FX line is this month’s MRR at this month’s rates minus the same MRR at last month’s rates.
The bridge reconciles exactly. A property test generates random contract histories and checks that opening plus movements plus FX equals closing in every month.
Board packs include 1, 3 and 12-month bridges. Closed months are read as reported, with any restatement on its own line.
Common mistakes
- A plug line
- If the bridge needs an “other” line to balance, the movements and the totals are coming from different sources.
- Currency inside expansion
- A weaker dollar raises the value of euro and sterling contracts. Without an FX line, that shows up as expansion.
- Win-backs counted as new business
- A customer who left and came back is not a new logo. Counting them as new overstates acquisition and hides the earlier churn.
- Opening MRR that is not last month’s closing
- If the two differ, something changed after the month was reported. Show it as a restatement.