What MRR growth rate measures
MRR growth rate tracks how your recurring run-rate changed from one point in time to another. It's a clean momentum metric when you keep the MRR definition consistent.
Key formulas
- Period growth = (end MRR - start MRR) / start MRR.
- CMGR = (end/start)^(1/months) - 1 (compounded monthly).
- Annualized growth = (end/start)^(12/months) - 1.
How to make the metric actionable
- Use an MRR waterfall to explain what drove growth (new vs expansion vs churn).
- Segment by plan and customer size to avoid blended averages hiding churn pockets.
- Pair growth with retention metrics (NRR/GRR) and payback for quality.
Benchmarks and context
- High growth early can be volatile; compare to trailing 3-month averages.
- Use CMGR for mid-term planning and annualized growth for long-range targets.
- Treat one-off enterprise deals as separate events, not recurring momentum.
Data QA checklist
- Confirm MRR snapshot dates are aligned across months.
- Exclude non-recurring revenue and usage spikes from MRR.
- Reconcile with the MRR waterfall to confirm movements add up.
Common mistakes
- Changing the MRR definition between snapshots (one-time items included sometimes).
- Comparing very short windows without seasonality context.
- Mixing run-rate metrics (MRR) with recognized revenue (accounting).