Calculate monthly recurring revenue, annual recurring revenue, MRR growth rate, and quick ratio — the foundation of SaaS financial tracking.
MRR is not a single number — it is built from five components that tell a complete story about your revenue health. Tracking each component separately reveals where growth is coming from and where it is leaking.
| Component | Definition | What It Tells You |
|---|---|---|
| New MRR | Revenue from brand-new customers | Sales team effectiveness and market demand |
| Expansion MRR | Revenue from upsells, upgrades, seat adds | Product-led growth and customer success quality |
| Reactivation MRR | Revenue from previously churned customers | Win-back program effectiveness |
| Contraction MRR | Revenue lost to downgrades | Customer dissatisfaction signal; usually precedes churn |
| Churned MRR | Revenue lost to cancellations | Retention quality and product-market fit signal |
MRR is a bookings metric, not an accounting metric. If a customer pays $1,200 annually upfront, MRR is $100/month — you normalize to monthly. Recognized revenue (GAAP) is spread over the subscription period. Investors and operators use MRR; accountants use recognized revenue.
| ARR Stage | Target MoM Growth | Quick Ratio Target | Benchmark |
|---|---|---|---|
| <$100K ARR | 15-25% | 4+ | Early traction phase |
| $100K-$1M ARR | 10-15% | 3+ | Seed/Pre-Series A |
| $1M-$10M ARR | 5-10% | 2.5+ | Series A/B territory |
| $10M+ ARR | 3-7% | 2+ | Growth/Late stage |
MRR tracks month-to-month revenue and is the operational heartbeat of your SaaS business. ARR is simply MRR × 12, used for annual planning, investor presentations, and SaaS valuation multiples. Most Series A/B investors focus on ARR growth year-over-year.
It depends on your stage. Pre-$1M ARR, 15-25% MoM growth is excellent. At $1M-$10M ARR, 8-12% MoM is strong. The T2D3 framework (triple-triple-double-double-double from $1M to $100M ARR in 5 years) requires roughly 22% MoM growth. Investors care more about consistency than peaks.
SaaS Quick Ratio = (New MRR + Expansion + Reactivation) / (Churned + Contraction). Above 4 is excellent. Above 1 means you are growing. Below 1 means you are shrinking. Mamoon Hamid of Kleiner Perkins popularized the 4+ Quick Ratio as the benchmark for fundable SaaS companies.
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