Recurring Revenue Reporting Framework (ARR & MRR)

Contents

Overview

This document defines the framework for analyzing recurring revenue using ARR (Annual Recurring Revenue) and MRR (Monthly Recurring Revenue).

It standardizes how revenue movements, retention, and performance metrics are calculated and reported across all analytics reports.

The framework also supports flexible reporting configurations such as Order Date / Booked Date-based revenue reporting.

Objectives

• Provide a consistent revenue reporting framework
• Enable accurate tracking of revenue movements
• Support business decision-making across Finance, Sales, and Product teams
• Ensure alignment across all ARR and MRR reports

Key Concepts

ARR vs MRR

• MRR: Monthly recurring revenue
• ARR: Annual recurring revenue

Formula: ARR = MRR × 12

Revenue Movement Framework

Revenue movements represent how recurring revenue changes over time across different dimensions such as customer, subscription, product, or parent account.

Each reporting period (typically monthly) tracks how revenue evolves using standardized movement categories.

Revenue Movement Flow Diagram

This diagram illustrates how revenue transitions from Opening to End of Period through different movement types (New, Expansion, Contraction, and Churn).

It provides a high-level view of how recurring revenue evolves during a reporting period.

This flow applies consistently across all ARR and MRR movement reports regardless of aggregation level.

The following definitions apply to all ARR and MRR movement reports, regardless of aggregation level (Customer, Parent Customer, Subscription, or Product).

Movement Definitions 

Opening

The starting revenue (ARR or MRR) at the beginning of the reporting period.

• Represents the revenue carried forward from the previous period
• Equal to the End of Period value from the previous period
• Calculated at the selected aggregation level

New

Revenue from entities (customers, subscriptions, or products) that became active during the period and have not generated any revenue prior to this period.

• Applies only when the entity has no historical revenue before the current period
• The entity may have existed previously, but is considered New only if it has never generated revenue before

Expansion

Increase in revenue from existing entities that had active revenue in the previous period.

Examples

• Subscription upgrades
• Added products or services
• Increased pricing
• Increased usage (if enabled)

Contraction

Decrease in revenue from existing entities that still remain active.

Examples

• Subscription downgrades
• Reduced quantities or pricing
• Decreased usage
• Partial cancellations

Churn

Revenue lost from entities (customers, subscriptions, or products) that had positive revenue in the previous period and have zero revenue in the current period.

• Occurs when there is no remaining active revenue in the current period
• Represents full loss of recurring revenue

End of Period

The final revenue (ARR or MRR) at the end of the reporting period.

It is calculated as:

End of Period = Opening + New + Expansion − Contraction − Churn

• This value becomes the Opening for the next period

Example Scenario (Applicable to All ARR & MRR Reports)

The following example illustrates how revenue movements are calculated across periods.

Scenario

An entity (customer, subscription, or product) has the following revenue changes:

• Month 1: New subscription → 1,000
• Month 2: Upgrade → 1,500
• Month 3: Downgrade → 1,200
• Month 4: Cancellation → 0

Monthly Movement Breakdown

Key Observations

• Opening always equals previous period’s End
• Expansion reflects growth from existing entities
• Contraction reflects reduction without full loss
• Churn reflects complete loss of revenue
• End of Period is the final calculated value

Standard Calculation Logic

Movement = Current Value – Previous Value

Movement Rules

• New → No previous revenue
• Expansion → Increase from existing customer
• Contraction → Decrease but still active
• Churn → Complete loss of customer revenue

Reporting Dimensions

Reports can be analyzed at different levels:

• Customer
• Parent Customer
• Subscription
• Product

Report Categories

Reports are grouped into categories based on how recurring revenue is analyzed and presented. Each category serves a specific reporting purpose, such as tracking revenue movements, viewing current revenue distribution, or analyzing retention trends.

For a complete list of reports available under each category, refer to the respective report list.

How to Choose the Right Report

Filters 

All reports support standard report filters, enabling flexible and targeted data analysis. These filters help to refine report outputs based on business needs and reporting dimensions.

The following filters are commonly available across all reports:

Important Note

The Include Draft Subscriptions filter is available in all ARR Movement, MRR Movement, and MRR by Month reports. The default value is No, which excludes draft subscriptions from revenue calculations and reporting outputs. You can set the filter to Yes to include draft subscriptions in the report results. 

MRR/ARR Start Date Options

The MRR/ARR Start Date filter allows you to control how revenue is attributed across reporting periods.

Behavior

• When Order Date / Booked Date is selected:
  • Revenue is reported from the order date period
  • Reporting may begin before service start date
  • This is intended for management and investor reporting

Example

• Order Date: Nov 15, 2025

• Service Start: Jan 1, 2026

  Selected Option	Revenue Start
  Service Start Date	Jan 2026
  Order Date / Booked Date	Nov 2025

How to Use This Framework

All MRR/ARR reports follow the same:

• Calculation logic
• Movement definitions
• Data sources

Reports differ only by:

• Metric (ARR vs MRR)
• Aggregation level
• Inclusion of discounts