Project your SaaS revenue from first principles. Enter current customers, average contract value and monthly growth to see ARR, MRR and 12-month revenue trajectory including churn and expansion.
| Month | Customers | MRR | ARR | Net New MRR |
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SaaS revenue is fundamentally different from transactional revenue. It compounds through the interplay of new ARR added (new customer acquisition), churn (revenue lost from cancellations), and expansion (revenue growth from existing customers upgrading). Understanding these three levers — and how small changes in each compound over time — is the foundation of SaaS financial modelling.
MRR is the real-time monthly heartbeat of a SaaS business — useful for tracking month-to-month momentum. ARR (MRR × 12) is the primary valuation metric because it normalises annual contracts to a comparable figure. All MRR/ARR figures should include only committed recurring subscription revenue — exclude one-time implementation fees, professional services, and any non-recurring charges.
NRR measures revenue growth from your existing customer base alone. NRR = (Starting MRR + Expansion − Churn − Contraction) ÷ Starting MRR. Above 100% means your existing customers are expanding fast enough that you would grow even with zero new customer acquisition. Best-in-class: 120%+. Good: 100–115%. Concerning: below 90%.
Net New MRR = New MRR (from new customers) + Expansion MRR (upsells/upgrades) − Churned MRR (cancellations) − Contraction MRR (downgrades). Tracking these four components separately reveals exactly where revenue growth is coming from and where it is leaking. A business with strong new MRR but rising churn has a leaky bucket problem.
MRR (Monthly Recurring Revenue) is the monthly-normalised value of all recurring subscriptions. ARR (Annual Recurring Revenue) = MRR × 12. ARR is used as the primary metric for valuation and investor reporting because it creates a common basis for comparing businesses with different billing cycles (monthly vs annual). Use MRR for operational management (tracking weekly/monthly momentum) and ARR for strategic planning and fundraising.
NRR = (Beginning Period MRR + Expansion MRR - Churned MRR - Contraction MRR) / Beginning Period MRR × 100. Example: beginning MRR £100,000, expansion £8,000, churn £5,000, contraction £2,000: NRR = (£100,000 + £8,000 - £5,000 - £2,000) / £100,000 = 101%. This means existing customers grew revenue by 1% — modest expansion. Best-in-class enterprise SaaS achieves 120-140% NRR.
SaaS growth benchmarks: 20-30% ARR growth is considered moderate and fundable; 40-60% is strong; 60%+ is hyper-growth. The "T2D3" framework (Triple, Triple, Double, Double, Double) describes the ideal trajectory for enterprise SaaS. At £1M ARR: target 100%+ growth; at £5M ARR: 60-80%; at £20M ARR: 40-60%; at £50M+: 30-40%. Growth rate expectation declines with scale.