Closing Contracted MRR
Your contracted recurring revenue closing balance — the period-end binding commitment total after new bookings, expansions, downgrades, and cancellations flow through the waterfall.
◆ Currency
Formula
Built from
What it measures
The normalized monthly value of every binding, live customer contract as of month-end, calculated as a rolling waterfall. The starting balance plus the four component flows equals the ending balance that becomes next month's starting position. One-time fees, professional services, and usage overages are excluded; only the standing contracted recurring obligation counts — what customers are committed to pay, not what cash has landed or what accounting has recognized.
Why it matters
Closing CMRR is the bridge that connects what you opened the month with to what you close it with, and it becomes next month's opening position. Finance uses it to lock down the committed base heading into the next period. Leadership reads it as the month's net movement in the subscription footprint — growth, stagnation, or contraction. Because it closes out the bookings waterfall, it is the anchor for guidance, cash forecasting, and the monthly recurring revenue that will eventually flow through as recognized revenue and cash.
How to read it
Read Closing CMRR always as a trend and always against the prior month's closing. Month-over-month growth in Closing CMRR means new and expansion bookings outran downgrades and churn; flat or declining means the opposite. Break the waterfall into its five components — two companies with the same Closing CMRR but different component mixes have very different health. Compare quarter over quarter or year over year to strip out monthly seasonality and see true momentum. Pair it with the starting balance to read the period's efficiency: a $50K increase on a $500K opening is 10% monthly growth; on a $1M opening the same $50K is 5%, which should feel different.
What good looks like
Good
Closing CMRR growing period over period on strong new bookings and expansion, with upsells plus new substantially outpacing downsells plus churn.
Watch
Growth flat or slowing; downgrades and churn beginning to offset new wins; early signs of an unstable base despite healthy opening balance.
Bad
Closing CMRR declining period over period, with churn and downgrades outrunning all inflows; committed revenue shrinking despite acquisition efforts.
Watch-outs
- Booking contracts at full value. A $36K annual deal is $3K of Closing CMRR (TCV ÷ term in months), not $36K — always normalize to the monthly equivalent or the metric spikes on signing and collapses at renewal.
- Confusing contracted with cash. Closing CMRR is the committed obligation; cash collected and revenue recognized under ASC 606 follow different timelines. A $24K, 24-month contract is $1K of CMRR from day one but may recognize far less and cash even less in month one.
- Forgetting the starting balance. Closing CMRR makes sense only in context of Starting CMRR — a $50K increase on a $500K opening is strong; the same $50K on a $2M opening is weak. Always compare (Closing − Starting) ÷ Starting to read the percentage motion.
- Double-counting or missing flows. Each component (new, upsell, downsell, churn) should flow only once. If your billing system already nets downsells and churn, do not subtract both independently. Always audit the waterfall to ensure exactly Starting + New + Upsell − Downsell − Churn = Closing.
Worked example
Hypothetical
June closes at $500K CMRR. In July you sign $75K of new contracts, existing customers expand by $15K, one downgrades by $3K, and you lose $12K to churn. July's Closing CMRR is $575K — your committed recurring revenue balance heading into August.