Definition
Net new MRR is the change in MRR in a period after expansions, contractions, and churn. It combines growth and retention movements.
Formula
Net new MRR = new MRR + expansion MRR - contraction MRR - churned MRR
Example
If new MRR is $40k, expansion is $15k, contraction is $5k, and churned MRR is $10k, net new MRR = $40k+$15k-$5k-$10k = $40k.
How to use it
- Track net new MRR by segment to find durable growth sources.
- Pair with churn/retention to diagnose whether growth is leaky.
- Use consistent definitions across months for clean trend analysis.
Common mistakes
- Mixing MRR (run-rate) with billings or cash (timing differs).
- Counting reactivations inconsistently (treat them consistently as new or separate).
Measured as
Net new MRR = new MRR + expansion MRR - contraction MRR - churned MRR
Misused when
- Mixing MRR (run-rate) with billings or cash (timing differs).
- Counting reactivations inconsistently (treat them consistently as new or separate).
Operator takeaway
- Track net new MRR by segment to find durable growth sources.
- Pair with churn/retention to diagnose whether growth is leaky.
- Use consistent definitions across months for clean trend analysis.
- Keep Net New MRR consistent by cohort, segment, and period before you use it as a decision signal in planning or reporting.
- Interpret the metric alongside retention, margin, or payback so one ratio does not hide the real operating trade-off.
Next decision
- Quantify the impact with Net New MRR Calculator if you need to turn the definition into an operating assumption.
- Read MRR waterfall: reconcile starting MRR to ending MRR if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
Where to use this on MetricKit
Calculators
- Net New MRR Calculator: Calculate net new MRR from new, expansion, contraction, and churned MRR.
- MRR Waterfall Calculator: Build an MRR waterfall: starting MRR + new + expansion - contraction - churn = ending MRR.
- MRR Forecast Calculator: Monthly Projection, Formula, and Example: Project future MRR using new MRR, expansion, contraction, churn, and time horizon inputs with a simple monthly forecast model.
Guides
- MRR waterfall: reconcile starting MRR to ending MRR: A practical MRR waterfall guide: starting MRR + new + expansion - contraction - churn = ending MRR, with an example and pitfalls.
- Retention & churn hub: cohorts, GRR/NRR, and retention curves: A practical hub for retention measurement: churn rate, GRR/NRR, cohort retention curves, and how to set retention targets without getting misled by noise.
- MRR: what it means (and how to track it cleanly): A guide to MRR: definitions, what to include/exclude, and how to decompose MRR changes over time.
- MRR Forecast Formula: Example, Template, and Monthly Bridge: Learn how to forecast MRR with a monthly bridge model using starting MRR, new MRR, expansion, contraction, and churn.