MRR & ARR Reports - Overview
Recurring revenue refers to the revenue that a company receives on a regular basis, making it one of the key metrics for a SaaS company. The MRR & ARR reports in Zoho Billing lets you gain insights on this key metrics for a monthly or annual basis, helping you to judge your company’s overall performance.
Zoho Billing supports the following recurring revenue reports:
- Monthly Recurring Revenue (MRR)
- Annual Recurring Revenue (ARR)
- MRR Quick Ratio
Monthly Recurring Revenue (MRR)
The Monthly Recurring Revenue (MRR) report in Zoho Billing lets you view the total recurring revenue that your business receives every month in a period. You can view this report based on selected products or all products, and customize it further to view it for selected plans of the selected products or all plans of selected products.
What is Monthly Recurring Revenue?
Monthly Recurring Revenue is an essential business metric for subscription based businesses, which measures the recurring revenue generated by your customers on a monthly basis. This allows you to analyze the health of your business, identify trends and predict your future revenue.
Formula
Net MRR = Net New MRR + Previous MRR
Net New MRR = New MRR + Expansion MRR + Reactivation MRR - Contraction MRR - Churn MRR
| Metric | Description |
| New MRR | The recurring revenue generated from newly created subscriptions in a month. |
| Expansion MRR | The increase in recurring revenue from upgrading plan, increasing plan quantity, or increase in plan amount. |
| Reactivation MRR | The increase in recurring revenue generated from canceled subscriptions which have been activated, and paused subscriptions which have been resumed. |
| Contraction MRR | The decrease in recurring revenue from downgrades, decrease in plan amount or reducing plan quantity. |
| Churn MRR | The decrease in revenue due to subscriptions that are either canceled, paused, or expired. |
| Net New MRR | The total revenue from the new, upgraded, and reactivated subscriptions, with the reductions from contracted and churned subscriptions. |
| Previous MRR | The monthly recurring revenue at the end of the previous month. |
Performance Overview
Based on the selected date range, you can view the following details:
- Current MRR - The MRR for the latest month in the selected Date Range.
- Month on Month - The growth percentage in the latest month’s MRR compared to the previous month.
- Quarter on Quarter - The growth percentage in the latest month’s MRR compared to the previous quarter.
- Year on Year - The growth percentage in the latest month’s MRR compared to the previous year.
Chart View
The chart gives a visual representation of the MRR for each month. You can choose to display the chart as a Line chart or Bar chart.
You can also customize the chart type to display the Net MRR or Net New MRR of each month.
Breakdown View
The breakdown view displays the Net MRR for each month of the selected period, along with the other components that make up Net MRR.
You can click on any metric in the first column to view the list of all subscriptions that have contributed to each metric in the MRR Details report. You can also click any metric of each month to view the list of subscriptions that contributed to the metric for that month.
Insight: The MRR Details report is a drilldown report of MRR, which can be accessed by clicking on any metric in the breakdown view. This is particularly helpful to customize it further through filters, set export preferences, export them, and group them according to your needs.
How is this report helpful for your business?
The MRR report in Zoho Billing allows you to view the MRR for your business, which is a crucial metric for subscription-based businesses. This metric particularly helps you to track how well your business is performing in earning recurring revenue monthly and analyze the trend over a period of time. A reduction in MRR is an indication of more churn and downgrades by your customers in the period, while an increase in MRR in a period indicates that your business is attracting more new subscriptions and upgrades by your customers, compared to downgrades and churn.
This data allows you to dive down into the components that are affecting your MRR in a period, and take actions to bring churn and downgrades under control. For example, if you notice that there is a sharp increase in MRR during the beginning of the financial year for the past few years, you can predict for the upcoming spike, allowing you to increase your marketing activities and prepare for the increase.
Pro Tip: The MRR report in Zoho Billing also calculates the MRR generated from subscriptions whose billing frequency is more than a month, such as quarterly subscriptions and annual subscriptions, allowing you to gain overall insights about how much your company is generating from all subscriptions for each period.
Scenario: Mr. Boyle, the head of the Revenue department at Zylker, wants to view the MRR trend of the company in the current year. Using the MRR report in Zoho Billing, he can view how the company has performed in receiving recurring revenue from its customers for different periods. This helps him to identify the periods when the MRR is high, and periods when the MRR is low, allowing him to dive deeper into the causes of these trends. He can also predict the growth of the company based on this data and prepare for the same. For example, he notices that the MRR of the company grows at an average of 5% every month, and there is a sharp spike of around 15% at the beginning of every financial year. Based on this data, he can pass his feedback to the marketing team to allow them to promote their products, and prepare for the upcoming expected spike.
Annual Recurring Revenue (ARR)
The Annual Recurring Revenue report in Zoho Billing gives you aview the predicted recurring revenue that your business would receive annually based on the monthly recurring revenue for each month. You can view this report based on selected products or all products, and customize it further to view it for selected plans of the selected products or all plans of selected products.
What is Annual Recurring Revenue?
Annual Recurring Revenue or ARR is a key financial metric for a subscription based business, which shows the recurring revenue that your business is predicted to receive in a year, based on a month’s MRR.
Formula:
Net ARR = MRR x 12
Performance Overview
Based on the selected date range, you can view the following details:
- Current ARR - The ARR for the latest month in the selected Date Range.
- Month on Month - The growth percentage in the latest month’s ARR compared to the previous month.
- Quarter on Quarter - The growth percentage in the latest month’s ARR compared to the previous quarter.
- Year on Year - The growth percentage in the latest month’s ARR compared to the previous year.
Chart View
The chart gives a visual representation of the ARR for each month. You can choose to display the chart as a Line chart or Bar chart.
Breakdown View
The breakdown view displays the Net ARR for each month of the selected period for the selected plans and products.
How is this report helpful for your business?
The ARR report in Zoho Billing allows you to view the predicted recurring revenue that your business will earn annually, based on how your business is earning MRR every month. ARR is an essential metric for subscription-based businesses to understand and predict the long-term financial health of your business. ARR is also an important metric to evaluate the business valuation, and is taken into account by investors for your company.
Scenario: Patricia Boyle, the CEO at Zylker, wants to raise funds from investors for her subscription-based business. Her investors want to know how the business is performing and how much revenue it would earn in a year if it operates at the same pace. Using the ARR report in Zoho Billing, she can show the recurring revenue Zylker is expected to earn in a year, based on the current performance. This allows her to calculate her valuation and approach the investors accordingly.
MRR Quick Ratio
The MRR Quick Ratio report in Zoho Billing displays the ability of your business to grow your monthly recurring revenue after accounting for lost monthly recurring revenue for each month. You can view this report based on selected products or all products, and customize it further to view it for selected plans of the selected products or all plans of selected products.
What is MRR Quick Ratio?
MRR Quick Ratio is a key metric for subscription-based businesses, which is a ratio between your growth MRR and lost MRR. It gives you insights into your business’s capacity to expand and grow recurring revenue.
Formula:
MRR Quick Ratio = (New MRR + Expansions) / (Contractions + Churn)
Pro Tip: If the MRR Quick Ratio is less than 1, it means the business is losing more recurring revenue to churn and contractions, than it is gaining through new subscriptions and expansions. If the MRR Quick Ratio is more than 1, it means that the business is gaining more recurring revenue through new subscriptions and expansions, than it is losing through churn and contractions. A MRR Quick Ratio of 4 or higher is usually considered ideal for a SaaS business.
| Metric | Description |
|---|---|
| New MRR | The recurring revenue generated from newly created subscriptions in a month. |
| Expansion MRR | The increase in recurring revenue from upgrading plan, increasing plan quantity, or moving to a paid plan from a trial or free plan. |
| Contraction MRR | The decrease in recurring revenue from downgrades or reducing plan quantity. |
| Churn MRR | The decrease in revenue due to subscriptions that are either canceled, paused, or expired. |
Performance Overview
Based on the selected date range, you can view the following details:
- Current Ratio- The MRR Quick Ratio for the latest month in the selected Date Range.
- Month on Month - The growth percentage in the latest month’s MRR Quick Ratio compared to the previous month.
- Quarter on Quarter - The growth percentage in the latest month’s MRR Quick Ratio compared to the previous quarter.
- Year on Year - The growth percentage in the latest month’s MRR Quick Ratio compared to the previous year.
Chart View
The chart gives a visual representation of the MRR Quick Ratio for each month. You can choose to display the chart as a Line chart or Bar chart.
Breakdown View
The breakdown view displays the MRR Quick Ratio for each month of the selected period for the selected plans and products, along with the other components that make up MRR Quick Ratio.
The MRR Quick Ratio gives you a simplified understanding of how well your business is handling recurring revenue over a period of time. A quick ratio of more than 1 means that your company is gaining more recurring revenue through new subscriptions and expansions than losses in recurring revenue for contractions and churn. This helps businesses evaluate how effectively they are managing recurring revenue growth versus loss.
Scenario: Aaron Brown, the head of the Revenue department, wants to view how well the business is performing in expanding in recurring revenue. He can view the MRR Quick Ratio to gain quick insights about how well the business is doing in expanding recurring revenue. Based on the ratio, he can take further action to improve it.
Report Functions
The MRR and ARR reports in Zoho Billing support the following report functions:
| Report Functions | MRR | ARR | MRR Quick Ratio |
|---|---|---|---|
| Filter Report | ✔ | ✔ | ✔ |
| Compare Report | ✔ | ✔ | ✔ |
| Group Report | X | X | X |
| Customize Report Columns | X | X | X |
| Sort Columns | X | X | X |
| Schedule Report | ✔ | ✔ | X |
| Share Report | ✔ | ✔ | ✔ |
| Export Report | ✔ | ✔ | X |
| Custom Report | X | X | X |
| Print Report | X | X | X |
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