Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is a key performance metric used by SaaS and subscription-based businesses to measure the predictable and recurring revenue generated each month. MRR is a critical indicator of business health, providing insights into how stable and reliable a company’s revenue stream is. Unlike one-time sales or ad-hoc revenue, MRR reflects the ongoing payments a company can expect from customers on a monthly basis.

The formula for MRR is:

MRR = Total Number of Active Subscribers x Average Revenue per User (ARPU)

For example, if a SaaS company has 500 active users, each paying AED 200 per month, the MRR would be:

MRR = 500 x 200 = AED 100,000

Tracking MRR allows businesses to forecast future revenue, identify potential churn, and make informed decisions about expansion or resource allocation. Companies with a high MRR have a more predictable income stream, which is essential for financial planning and investment.