Blurred Monthly Recurring Revenue (MRR) – A waterfall view

Monthly Recurring Revenue (and its yearly equivalent ARR) is a well-known financial aggregate in the world of cloud-based SaaS companies, a sort of holy grail in most of subscription-based software valuation models. Though a lot has been said on its definition(s), we share in the present article our view on some underlying – sometimes significant – subtleties that we noticed through our manifold audit and advisory engagements over the past few years. As the below list does not pretend to be fully exhaustive, our aim is to provide a helpful methodology and draw your attention on main pitfalls, with a view of better appreciating the framework of MRR.