Net New MRR
The net change in monthly recurring revenue from all sources—new customers, upgrades, downgrades, and churn—over a period.
◆ Currency
Formula
Built from
What it measures
The period-over-period change in your recurring revenue base — the four waterfall moves netted together. You add inflows (new and upsell) and subtract outflows (downsell and churn). It equals your closing MRR minus your opening MRR, and it strips out the starting balance so you see only what the period actually added or destroyed.
Why it matters
Net New MRR tells you whether your revenue is actually growing, not just whether you closed deals. New bookings alone are a vanity number — what matters is whether expansion and new-customer revenue outrun contraction and churn. Your leadership team reads it monthly to track momentum, and your board reads it to judge whether the company is on a sustainable, compounding growth trajectory or quietly treading water.
How to read it
Positive net new MRR means you're growing; negative means you're shrinking. Read it as a trend, not a single month — compare to prior month, prior quarter, and plan. Then decompose it: strong new MRR with heavy churn is a leaky bucket; strong upsell with declining new MRR means you're maturing but starving acquisition. Context by stage — an early-stage company should run net new well above its base each month, while a scale-stage company settles into low single-digit percentages with expansion doing more of the work.
What good looks like
Good
Net new MRR is positive every month and trending up, with new and upsell revenue outpacing downsell and churn by a clear margin.
Watch
Net new MRR is still positive but flattening or narrowing — new revenue is slowing or churn is creeping up, signaling a traction plateau.
Bad
Net new MRR is negative or hovering near zero, meaning churn and downgrades are eating your new bookings and the business is treading water.
Watch-outs
- Confusing net new with gross new. Gross new counts only new customers; net new includes all four moves. Reporting gross new alone hides the damage from churn and downgrades and flatters your real growth.
- Booking annual contracts as a lump instead of the monthly equivalent. A $12K annual deal is $1K of net new per month, not $12K — normalize or your net new spikes on signing and craters at renewal.
- Including one-time fees or usage overages. Only recurring subscription revenue counts; padding with setup fees, services, or overage breaks month-to-month comparability and overstates the run-rate.
- Ignoring which component drove the move. +$5K from +$8K new and -$3K churn is a very different business than +$5K from +$2K new and +$3K upsell — always read the waterfall, not just the total.
Worked example
Hypothetical
Start the month at $100K MRR. Sign $15K of new customer subscriptions, expand existing customers by $5K through upsells, lose $2K to downgrades, and lose $4K to churn. Net New MRR for the month is $14K, and you close at $114K.