Net New MRR Formula: Exact SaaS Calculation Rules

Strict net new MRR measures net recurring revenue creation after growth inflows and loss outflows are both included.

• NewMRR: recurring revenue from new customers.
• ExpansionMRR: recurring revenue added from existing customers.
• ContractionMRR: recurring revenue lost from downgrades or seat reduction.
• ChurnedMRR: recurring revenue fully lost from churned customers.

• Do not double-count full churn as contraction.
• Use one stable movement taxonomy across the whole period.
• Use normalized recurring values for annual and multi-year contracts.

Reactivation must be handled explicitly. If policy excludes reactivation from net new MRR, keep it outside the strict formula. If it is included, the metric must be renamed or the policy must be clearly documented.

• High reactivation month: can flatter growth if policy is inconsistent.
• Usage-based volatility: one month may need smoothing windows.
• Large contraction quarter: gross new business can hide worsening quality.

Suppose NewMRR = 20,000, ExpansionMRR = 5,000, ContractionMRR = 4,000, and ChurnedMRR = 8,000.

The business created 13,000 of strict net new MRR in the period.

Net new MRR is a movement-based net growth metric. If contraction is ignored, churn is double-counted poorly, or reactivation policy drifts, the result is not strict net new MRR.

Core metric pages:

• MRR
• MRR vs ARR
• ARR
• Net New MRR