MRR Growth vs Net Revenue Retention

Compare total MRR growth with net revenue retention to understand how new sales and existing-customer revenue movements affect ARR.

MRR growth and net revenue retention answer different questions. MRR growth shows the overall change in recurring revenue, including new customers. Net revenue retention focuses only on revenue from the opening customer base, making it useful for separating acquisition-led growth from customer-base performance.

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About MRR Growth vs Net Revenue Retention

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Growth driven mainly by new customers

A company may increase total MRR while losing revenue from its existing customer base.

Factor	Option A: Net MRR Growth	Option B: Net Revenue Retention	What It Means
Customer scope	Includes new and existing customers.	Includes only customers present at the beginning of the period.	The measures intentionally use different populations.
Revenue movements included	Includes new MRR, expansion, contraction, and churn.	Includes expansion, contraction, and churn; excludes new MRR.	New MRR is the key distinction between the two calculations.
Primary question answered	Did total recurring revenue rise or fall?	Did the opening customer base retain or expand its revenue?	Use the question being investigated to choose the metric.
Effect of strong acquisition	Strong new sales can produce positive growth.	New sales have no effect on the result.	Neither result is inherently better; they describe different dimensions of performance.
Use with ARR run rate	Directly affects ending MRR and therefore ARR.	Explains health of existing-customer revenue but does not include new MRR.	Ending MRR is the input used to annualize ARR in this calculator.

Positive MRR growth can coexist with net revenue retention below 100% when new MRR outweighs revenue lost from existing customers.

Expansion MRR vs New MRR

Both categories increase MRR, but they identify different sources of subscription growth.

Factor	Option A: Expansion MRR	Option B: New MRR	What It Means
Revenue source	Existing customers increase recurring spending.	Newly acquired customers begin recurring spending.	The correct classification depends on whether the customer was already active at the start of the period.
Examples	Upgrades, added seats, add-ons, or increased commitments.	First subscriptions from new customers.	Both are valid sources of recurring-revenue growth.
Included in ending MRR	Yes.	Yes.	Both increase ending MRR dollar for dollar.
Included in net revenue retention	Yes.	No.	Retention measures revenue movement within the opening customer base.
Impact on ARR	Raises the ending MRR used for ARR annualization.	Raises the ending MRR used for ARR annualization.	Both can increase the current ARR run rate.

Expansion and new MRR both grow the total run rate, but only expansion indicates growth within existing customer relationships.

Contraction MRR vs Churned MRR

Both reduce recurring revenue, but one reflects a lower-value active customer and the other a complete cancellation.

Factor	Option A: Contraction MRR	Option B: Churned MRR	What It Means
Customer status after movement	Customer remains active at a lower recurring amount.	Customer is no longer active.	The customer’s subscription status determines the category.
Typical cause	Downgrade, fewer seats, reduced plan, or lower committed usage.	Cancellation or non-renewal of the full subscription.	Both are negative MRR movements with different causes.
Effect on ending MRR	Subtracted from beginning MRR bridge.	Subtracted from beginning MRR bridge.	Both reduce ending MRR and annualized ARR.
Effect on net revenue retention	Lowers retention.	Lowers retention.	Both reduce retained revenue from the starting base.
Diagnostic value	Shows revenue pressure among retained customers.	Shows revenue lost with departing customers.	Tracking them separately helps identify the type of revenue loss.

Separating contraction from churn makes the MRR bridge more informative because the customer relationship outcome differs.

Key Differences at a Glance

Net MRR growth includes new customer revenue; net revenue retention does not.

Ending MRR determines the ARR run rate in this calculator.

Expansion MRR comes from existing customers, while new MRR comes from newly acquired customers.

Contraction retains the customer at a lower value, whereas churn removes the customer’s recurring revenue entirely.

A growing ARR run rate does not by itself show whether existing customers are expanding or contracting.

How to Decide

Choose this if: Use the full MRR bridge to reconcile beginning MRR to ending MRR each month.

Choose this if: Review net MRR change when the goal is to understand total subscription-revenue movement.

Choose this if: Review net revenue retention alongside growth to distinguish acquisition effects from existing-customer effects.

Choose this if: Keep category definitions consistent across reporting periods so trends remain comparable.

Choose this if: Treat ARR as an annualized run rate rather than a substitute for recognized revenue or a future revenue forecast.

Assumptions

All compared metrics use the same definition of recurring revenue and the same reporting period.
New MRR, expansion, contraction, and churn are mutually and consistently classified.
ARR is calculated as ending MRR multiplied by 12.
The comparison is educational and does not determine accounting treatment or financial reporting requirements.

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Frequently Asked Questions

Should I use MRR growth or net revenue retention to measure subscription growth?

Use MRR growth for total recurring-revenue movement and net revenue retention to assess revenue retained from the opening customer base. Reviewing both provides different context.

Can total MRR grow when net revenue retention is below 100%?

Yes. New MRR can exceed losses from existing customers, resulting in positive total MRR growth despite retention below 100%.

Does expansion MRR count as new MRR?

No. Expansion MRR comes from existing customers, while new MRR comes from customers newly acquired during the reporting period.

Do contraction and churn affect ARR in the same way?

Both reduce ending MRR, so both reduce the ARR run rate. They differ in whether the customer remains active.

Which MRR value should be annualized?

This calculator annualizes ending MRR because it represents the recurring monthly run rate after the period's revenue movements.

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