Monthly Recurring Revenue (MRR)

Reporting MRR Basics and Understandings

There are many ways to report on data in Work 365. Depending on your role, you’re likely to have different requirements depending on what you are looking for. 

Outside of extracting data, Work 365 now supports MRR reporting. This can be seen by navigating to the Work 365 App >  My Work 365 > Business Metrics:

What is MRR?

MRR is the Monthly Recurring Revenue value associated with the contract. It is important to note that the unit of measurement here is only applicable to recurring items. Any non-recurring items (one-time service fees, usage, ad-hoc purchases) are not factored in this equation.

What can impact MRR?

MRR value is calculated based on the recurring fixed fees and/or discounts. Licenses, recurring flat fees (base fees), etc will be factored in. If a discount or credit is recurring, it will be reflected in the MRR in the associated discount period. Note: if you give a customer a one-time credit or discount it will not change the MRR value.

How would you use this metric?

A lot of businesses utilize the recurring value as part of their NorthStar metric (ARR, NRR, etc.). MRR/ARR is a great way to get a quick and accurate representation of the financial pulse of the company. While this is an important benchmark, this number is not a 1:1 correlation with cash flow. 

When is MRR reporting not relevant?

If you are attempting to understand any sort of financial metrics, forecasting, funding, auditing, etc- MRR is not the right tool. MRR will not reflect revenue recognition schedules or allow you to understand cash flow.

Why is usage not part of this calculation?

Usage is not recurring revenue and resets to a value of “0” at the beginning of every month. Usage is never a fixated price and therefore not a part of MRR standards.

My MRR number seems wrong. Why is that?

If you expect the MRR number to be different than what it’s reflecting, you’ll need to pay special attention to the configuration of the subscriptions. Note the service period times. MRR will change as subscriptions start, end, and change in value (but not always where we associate one-time fees and discounts!). MRR is a “real-time” metric: as customers renew, so will the MRR value.