Accounting Annual Recurring Revenue Calculator Examples
Worked examples show how monthly revenue movements affect ending MRR, annual recurring revenue, and net revenue retention.
These examples use a monthly MRR roll-forward and annualize the end-of-month result. They illustrate growth led by new customers, expansion within an existing customer base, and a month with net revenue loss.
Example 1: Growing subscription business
A software company begins the month with $10,000 in MRR.
Input Summary
Starting MRR
$10,000/month
New MRR
$1,500/month
Expansion MRR
$500/month
Contraction MRR
$200/month
Churned MRR
$300/month
Calculation Breakdown
- 1Net MRR change$1,500 + $500 − $200 − $300+$1,500/month
- 2Ending MRR$10,000 + $1,500$11,500/month
- 3Annual recurring revenue$11,500 × 12$138,000/year
- 4Net revenue retention(($10,000 + $500 − $200 − $300) / $10,000) × 100100.0%
Result Summary
Net revenue retention
100.0%
Accounting Annual Recurring Revenue Calculator
The business ends at $11,500 in MRR and an estimated ARR of $138,000.
Example 2: Expansion-led growth
A business with an established customer base gains modest new MRR but receives several plan upgrades.
Input Summary
Starting MRR
$50,000/month
New MRR
$2,000/month
Expansion MRR
$4,000/month
Contraction MRR
$500/month
Churned MRR
$1,000/month
Calculation Breakdown
- 1Net MRR change$2,000 + $4,000 − $500 − $1,000+$4,500/month
- 2Ending MRR$50,000 + $4,500$54,500/month
- 3Annual recurring revenue$54,500 × 12$654,000/year
- 4Net revenue retention(($50,000 + $4,000 − $500 − $1,000) / $50,000) × 100105.0%
Result Summary
Net revenue retention
105.0%
Accounting Annual Recurring Revenue Calculator
Ending MRR is $54,500, estimated ARR is $654,000, and net revenue retention is 105.0%.
Example 3: Churn outweighs new sales
A small subscription business experiences several cancellations and customer downgrades.
Input Summary
Starting MRR
$20,000/month
New MRR
$800/month
Expansion MRR
$200/month
Contraction MRR
$600/month
Churned MRR
$1,500/month
Calculation Breakdown
- 1Net MRR change$800 + $200 − $600 − $1,500−$1,100/month
- 2Ending MRR$20,000 − $1,100$18,900/month
- 3Annual recurring revenue$18,900 × 12$226,800/year
- 4Net revenue retention(($20,000 + $200 − $600 − $1,500) / $20,000) × 10090.5%
Result Summary
Net revenue retention
90.5%
Accounting Annual Recurring Revenue Calculator
The business ends with $18,900 in MRR and estimated ARR of $226,800.
How to Read Your Results
Ending MRR is the recurring revenue run rate after the month's additions and losses.
ARR is an annualized run-rate estimate, not necessarily revenue that will be recognized or collected during the next 12 months.
A positive net MRR change means ending MRR is higher than starting MRR.
Net revenue retention focuses only on customers in the opening revenue base; it excludes new MRR.
Retention above 100% means expansion exceeded contraction and churn within the starting customer base.
Assumptions & Important Notes
- Each example treats the entered amounts as monthly recurring revenue, not one-time billings.
- ARR is calculated from ending MRR multiplied by 12.
- New MRR, expansion, contraction, and churn are recorded once and in the same month.
- The examples do not adjust for taxes, refunds, foreign exchange, revenue recognition, or deferred revenue.
Related Examples
Frequently Asked Questions
Should ARR examples use beginning or ending MRR?
This calculator uses ending MRR, so the ARR estimate reflects the recurring revenue run rate after the reporting month's changes.
What does negative net MRR change mean?
It means contraction and churn were greater than new and expansion MRR for that month.
What is a healthy net revenue retention percentage?
The result is best interpreted against the business's own historical trend, customer mix, pricing model, and reporting definitions. It is an estimate, not a benchmark or recommendation.
Can a business have positive net MRR change and retention below 100%?
Yes. New customer MRR can make total MRR grow even when the opening customer base loses revenue overall.
Ready to calculate your own result?
Use the live calculator with your own inputs, timing, and preferences.