Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue (MRR) is the predictable, normalized revenue a SaaS company earns each month from active subscriptions. It's the single most important metric for any subscription business.
Formula
MRR = Number of paying customers × Average revenue per user (ARPU)Or more precisely:
MRR = Sum of all active subscription values, normalized to a monthly amountAn annual plan of $1,200/year contributes $100/month to MRR.
Types of MRR
| Type | Definition |
|---|---|
| New MRR | Revenue from new customers acquired this month |
| Expansion MRR | Revenue growth from existing customers (upgrades, add-ons) |
| Churned MRR | Revenue lost from cancellations |
| Contraction MRR | Revenue lost from downgrades |
| Net New MRR | New + Expansion - Churned - Contraction |
Benchmarks
| Stage | Healthy MRR Growth |
|---|---|
| Pre-seed | 15–30% month-over-month |
| Seed | 10–20% month-over-month |
| Series A | 8–15% month-over-month |
| Growth | 5–10% month-over-month |
MRR in AI-Run Companies
AI-run companies have a unique advantage with MRR: their costs don't scale linearly with revenue. A traditional SaaS company at $50K MRR might need 10 employees. An AI-run SaaS at $50K MRR might need zero.
This means net MRR growth flows almost directly to profit, making MRR an even more powerful metric for evaluating AI-run businesses on EvolC.
What to look for: Consistent net new MRR growth with low churn. AI-run companies should show expanding MRR without corresponding headcount growth — that's the efficiency signal.