Accounting Annual Recurring Revenue (Monthly) Calculator
Calculate annual recurring revenue from monthly recurring revenue, including new, expansion, contraction and churned revenue.
Overview
This Accounting Annual Recurring Revenue (Monthly) Calculator annualizes your ending monthly recurring revenue (MRR). Enter starting MRR and the month’s new revenue, upgrades, downgrades, and cancellations to estimate ARR, ending MRR, and net revenue retention.
How it works
The calculator starts with opening MRR, then adds new customer MRR and expansion MRR. It subtracts contraction MRR and churned MRR to find ending MRR. ARR is ending MRR multiplied by 12. Net revenue retention compares the retained value of the starting customer base with starting MRR, including expansion but excluding new customer revenue.
How to use this calculator
- 1Enter your recurring revenue at the beginning of the month.
- 2Add MRR from new customers gained during the month.
- 3Enter expansion MRR from upgrades or added recurring services.
- 4Subtract MRR lost through downgrades and customer cancellations.
- 5Review your ending MRR, annualized recurring revenue, and retention rate.
Example Calculation
Starting monthly recurring revenue
$10,000
New monthly recurring revenue
$1,500
Expansion monthly recurring revenue
$500
Contraction monthly recurring revenue
$200
Churned monthly recurring revenue
$300
Annual recurring revenue
$138,000
Starting with $10,000 in MRR, the business adds $1,500 in new MRR and has a net MRR increase of $1,500. Ending MRR is $11,500, which annualizes to $138,000 in ARR. Net revenue retention is 100.0%.
Frequently asked questions
What is annual recurring revenue (ARR)?
ARR is the annualized value of recurring revenue. In this calculator, it is ending monthly recurring revenue multiplied by 12.
How is ARR calculated from MRR?
For a business with stable monthly subscriptions, ARR is calculated as MRR × 12. This calculator uses ending MRR for the selected month.
Should one-time setup fees be included in ARR?
No. ARR normally includes predictable recurring subscription or contract revenue, not one-time fees, project work, or other non-recurring income.
What is the difference between churn and contraction MRR?
Churned MRR is lost when a customer fully cancels. Contraction MRR is lost when an existing customer stays but reduces their plan, seats, or recurring spend.
Does net revenue retention include new customers?
No. Net revenue retention measures how revenue from the starting customer base changed after expansion, contraction, and churn. New customer MRR is excluded.
Can ARR decrease even when new customers are added?
Yes. ARR can decline if contraction and churned MRR exceed the combined value of new and expansion MRR during the period.
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Assumptions and warnings
Assumptions
- Annual recurring revenue is calculated as ending monthly recurring revenue multiplied by 12.
- Only recurring subscription or contract revenue is included; one-time fees, implementation work, and usage that is not recurring are excluded.
- New, expansion, contraction, and churned MRR are measured consistently for the same reporting month.
- Net revenue retention excludes MRR from newly acquired customers.
- Results are estimates based on the revenue movements entered.
Warnings
- This calculator provides an accounting estimate only and is not financial or accounting advice.
- Revenue recognition policies, contract terms, refunds, foreign exchange, and deferred revenue may affect reported figures.