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Marketing Glossary· MRR/ARR

What are MRR and ARR?

By Nikhil Sharma · Updated 1 November 2026 · Marketing Glossary
Definition

MRR and ARR are the two standard ways subscription and SaaS businesses measure predictable revenue — Monthly Recurring Revenue (MRR) and its annualised form, Annual Recurring Revenue (ARR).

What are MRR and ARR?

MRR is the predictable revenue a subscription business earns each month from active subscriptions; ARR is the same figure annualised (MRR × 12). Both strip out one-off charges to show the steady, recurring base — the number investors and operators watch most closely in a subscription model.

Why they matter

Recurring revenue is the foundation of subscription economics. Growth is tracked as new MRR, expansion MRR and churned MRR, which ties directly to churn, retention and lifetime value. Marketing that lifts expansion and cuts churn moves MRR as surely as new acquisition does.

How to use them

Use MRR for month-to-month operating decisions and ARR for annual planning and valuation. Watch the components — if churned MRR is eating new MRR, acquisition spend is just filling a leaky bucket, and retention is the real lever.

Related terms
LTVChurnRetentionCACKPI
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Written & reviewed by Nikhil Sharma
Founder, Fabulous Media
Nikhil has led growth for 850+ brands across 35 nations since 2008. Fabulous Media is an invitation-only growth agency that reports on pipeline and revenue, not vanity metrics. Meet the team · Request an invite.

Questions, answered

MRR is Monthly Recurring Revenue — the predictable revenue earned each month. ARR is Annual Recurring Revenue, the same figure annualised (MRR x 12). MRR suits month-to-month tracking; ARR suits annual planning and valuation.

Only predictable, recurring subscription revenue counts — normalised to a monthly figure. One-off setup fees, usage overages that don't recur, and non-recurring charges are excluded so the number reflects the steady base.

Because it shows the predictable revenue base and how it's changing — new, expansion and churned MRR. It ties marketing and retention directly to revenue growth in a way one-off sales figures can't.

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