ARR/MRR (Recurring Revenue)
Recurring revenue is income earned on a consistent basis, usually monthly or annually. It is a key metric for SaaS and subscription businesses, as it reflects predictable revenue streams.
In Rillet, you can track both Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) to measure financial health and performance.
How ARR/MRR Is Calculated in Rillet
Recurring revenue is calculated from several objects in Rillet that can impact the result:
Contracts
Invoices
Credit Memos
Overrides
These objects can be created directly in Rillet or synced from external systems (for example, Stripe or internal billing tools).
Recurring revenue is calculated using the product type, line amount, and line dates set up in your Rillet account. Contract Line Items, Standalone Invoice Line Items, and Credit memo Line Items can all impact ARR.
Three inputs determine the ARR/MRR impact for each line item:
Product Type: the product must have Count to MRR/ARR enabled.
Product Dates: the dates on the line item (from contracts, invoices, or credit memos).
Product Amount: the amount of the line item
Formulas
MRR = Line item value ÷ number of months
ARR = (Line item value ÷ number of months) × 12
You can apply overrides to existing invoices or create standalone overrides in ARR Waterfall > Rollforward View.
Types of ARR Changes
Rillet tracks changes in recurring revenue by comparing each customer’s recurring revenue at the end of a month with the previous month. These changes are grouped into categories so you can quickly understand how your revenue is shifting.
New Sales
A new sale in SaaS refers to acquiring a new customer who subscribes to your software for the first time. It typically involves a signed contract or completed subscription. A customer will be considered a new sale, if these conditions are met.
Customer is new (there is no previous recurring revenue value in Rillet)
Prior month RR value = $0
Current month RR value > $0
Churn
Churn refers to customers which are no longer are active, paying customers. A customer will be considered churn, if these two conditions are met.
Prior month MRR value > $0
Current month MRR value = $0
Expansion
Expansion refers to customers which have increased their total recurring spend. A customer is considered expansion if these two conditions are met:
Prior month RR value > $0
Current month RR value > Prior month RR value
Contraction
Contraction refers to customers which have decreased their total recurring spend, but still remain an active customer. A customer is considered contraction if these conditions are met:
Prior month RR value > $0
Current month RR value > $0
Current month RR value < Prior month RR value
Reactivation
Reactivtion refers to customers which had previously churned, but are now active. A customer is considered reactivation if these conditions are met:
Customer previously existed in Rillet
Prior month RR value = $0
Current month RR value > $0
Usage Impact
The usage impact refers to the increase or decrease in a customer's value based on variable subscription types (ex. usage based monthly subscriptions). The Usage Impact to recurring revenue is separated from the other categories as it can be more volatile, but is still able to be displayed in this category.
Formulas
Usage Overage of Current Month - Usage Overage of Prior Month
Usage Overage = Amount of revenue on usage products above any minimum commitment
FX Impact
If you use contracts with multiple currencies, it can often be difficult to report change in ARR as exchange rates are constantly changing. Rillet will automatically breakout the impacts to ARR caused by FX/exchange rates, into this separate category.
For more information, see articles in the Multi-Currency section.
See Also
Learn more about recurring revenue and financial metrics:
See Also:
Explore more metrics and revenue tracking:
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