Recurring revenue growth (MRR/ARR)
Monthly / annual recurring revenue growth
To measure recurring revenue growth in a SaaS (software as a service) company, you can calculate the month-over-month (MoM) or year-over-year (YoY) change in your recurring revenue.
MRR (monthly recurring revenue) and ARR (annual recurring revenue) are both measures of recurring revenue, but MRR is measured on a monthly basis and ARR is measured on an annual basis. To calculate MRR, you can simply sum up all of your monthly recurring revenue streams, and to calculate ARR, you can multiply your MRR by 12.
To calculate MoM recurring revenue growth, you can use the following formula:
((Current month's recurring revenue - Previous month's recurring revenue) / Previous month's recurring revenue) x 100
This will give you the percentage change in your recurring revenue from one month to the next. For example, if your recurring revenue for the current month is $10,000 and was $9,000 the previous month, your MoM growth would be:
(($10,000 - $9,000) / $9,000) x 100 = 11.1%
To calculate YoY recurring revenue growth, you can use a similar formula:
((Current year's recurring revenue - Previous year's recurring revenue) / Previous year's recurring revenue) x 100
This will give you the percentage change in your recurring revenue from one year to the next. For example, if your recurring revenue for the current year is $120,000 and was $100,000 the previous year, your YoY growth would be:
(($120,000 - $100,000) / $100,000) x 100 = 20%