Is ARR just MRR times 12?

In most cases, yes. ARR = MRR × 12. The only wrinkle is if you have non-recurring revenue mixed into your MRR figure (one-time setup fees, professional services). Strip those out before multiplying. ARR should only include predictable, recurring subscription revenue.

Should I track both ARR and MRR?

Yes, and most analytics tools calculate both automatically. The real question is which to put front and centre in each context. Internal Slack updates? MRR. Board deck? ARR. Revenue recovery dashboard? MRR, because you need monthly resolution to see the impact of dunning.

Which metric do investors prefer?

ARR. It's the language of fundraising. A company describing itself as '$5M ARR growing 100% year-over-year' tells a cleaner story than '$417K MRR growing 6% month-over-month,' even though both describe the same business. If you're only showing MRR in a pitch deck, you're making investors translate.

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ARR vs MRR: When to Use Each

ARR and MRR are two views of the same number. Here's when each is the right metric to reach for, and how to convert between them.

Same metric, different lens

ARR and MRR measure the same thing: predictable subscription revenue. ARR annualises it. MRR keeps it monthly. The choice of which to use comes down to who you’re talking to and what decision you’re making.

The conversion

ARR = MRR × 12

MRR = ARR / 12

If your MRR is $42,000, your ARR is $504,000. If someone tells you their ARR is $1.2M, their MRR is $100,000. The maths is trivial. The choice of framing is not.

When MRR is the right metric

MRR is your operational metric. Use it when you need to understand what’s happening right now.

Tracking MRR movements month to month tells you whether new revenue is outpacing losses. It surfaces problems early. A $3,000 drop in MRR this month is a signal to investigate. Annualised, that’s a $36,000 problem, but you wouldn’t notice it in ARR until the trend had been running for a while.

MRR is also the right metric when you’re making pricing changes, running experiments, or evaluating the impact of a new feature. Monthly resolution gives you faster feedback.

Use MRR for:

Monthly reporting and dashboards
Pricing experiments and A/B tests
Tracking expansion and contraction trends
Measuring the impact of dunning on revenue recovery

When ARR is the right metric

ARR is your strategic and fundraising metric. It’s what investors, board members, and analysts expect to see.

SaaS valuation multiples are expressed as a multiple of ARR. Growth rates benchmarked across the industry use ARR. When Bessemer or OpenView publish SaaS benchmarking reports, they’re comparing companies by ARR, not MRR.

If your business primarily sells annual contracts, ARR is also the more natural operational metric. A customer signing a $24,000/year deal contributes $24,000 to ARR and $2,000 to MRR. The ARR figure better reflects the actual commitment.

ARR is the number you’ll reach for in fundraising, annual planning, benchmarking against peers, and board presentations. Anywhere the conversation is strategic rather than operational, ARR is the expected currency.

A common trap

Here’s the most common mistake: mixing non-recurring revenue into either metric. One-time setup fees, professional services, or consulting revenue shouldn’t appear in your MRR or ARR. Both metrics should only include predictable, recurring subscription revenue. Mixing in one-time charges inflates the number and makes trend analysis unreliable.

The other trap is annualising a single strong (or weak) month. If you had an unusually high MRR in January because of a product launch, multiplying that by 12 overstates your real run rate. ARR works best when MRR is relatively stable or trending consistently.

How churn affects both

Every customer lost to churn reduces both MRR and ARR. The difference is how visible the impact is. A 5% monthly churn rate looks manageable as a monthly number. Annualised, it compounds to roughly 46% of your customer base lost over a year. We’ve seen this mismatch catch founders off guard repeatedly.

The fastest way to protect both metrics is to recover involuntary churn: customers who didn’t want to leave but whose payments failed. That revenue is recoverable through dunning, and it shows up immediately in your MRR and your annualised ARR.