What is CMRR?
Committed Monthly Recurring Revenue (CMRR) is a projection of MRR into the future. It’s based on expected or scheduled changes to a subscription, for example, a future cancellation a customer has already communicated.
It’s often found under two different names: Committed Monthly Recurring Revenue or Contracted Monthly Recurring Revenue.
CMRR allows you to:
- See changes in MRR before an invoice is generated or paid.
- Preempt revenue loss by winning back customers who are scheduled to churn.
- Determine whether you’re on track to achieve performance goals.
Committed Monthly Recurring Revenue can help SaaS companies fight churn, realign priorities and better manage their budgets. CMRR can also help teams know if they’re going to hit their end-of-year growth goals and proactively strategize if things aren’t currently going to plan.
CMRR formula
At a high level, the formula for CMRR is fairly simple:
Despite this simple formula, there may be other elements that could be included in the CMRR calculation – there is no standard definition for this, so you’ll need to decide what makes sense for your business.
Example:
You have 120 customers, each paying $60 per month in subscriptions. For the next month, you have a guaranteed expansion MRR of $1200 and an expected churn of $500.
The CMRR for the next month is 7200 + 1200 – 500 = $7900.
Tracking CMRR
Tracking CMRR is easy in ChartMogul. Once your account has scheduled subscription events, you can track CMRR in the Committed MRR Forecast.
Track how scheduled subscription events will impact your MRR and ARR. CMRR takes into account all new business, cancellations, upgrades and downgrades so you can see what your MRR will be in the future, even before an invoice is generated.
You’ll be able to see the most complete picture of your company’s financial health with a breakdown of all scheduled monthly MRR movements from now into the future, and how they will impact your MRR and ARR.
You can also see CMRR in the MRR Breakdown dashboard tile. When you login to ChartMogul, you’ll see a quick overview of scheduled MRR movements for the month, quarter, or year right on your dashboard.
See scheduled movements on customer profiles. Subscription event-based movements like upgrades, downgrades and cancellations appear above past MRR movements on each customer’s profile. You are able to see when the event occurred and when the anticipated movement will take effect, giving you an up-to-date record of each customer.
What's the difference between MRR and CMRR?
While MRR and CMRR both help you measure and track monthly recurring revenue, they differ in the perspective they offer. For example, consider the views from a moving car. MRR is what you see through the rear window — it’s where you’ve been. Committed Monthly Recurring Revenue, on the other hand, is what you see through the front window — it’s where you’re headed.
MRR is subscription revenue you’ve already billed and received. It’s a trailing indicator — a look back at how (or whether) you achieved your revenue goals. ChartMogul calculates MRR using invoices and invoice line items.
CMRR is the revenue you expect to receive in the future. It’s a leading indicator — a look forward that helps you track progress toward revenue goals. ChartMogul calculates CMRR using subscription events.
| MRR | CMRR | |
|---|---|---|
| Type of indicator | Trailing | Leading |
| Use | Measuring past performance | Tracking progress toward future goals |
| Calculated from | Invoices and invoice line items | Subscription events |
What is monthly recurring revenue (MRR)?
Monthly Recurring Revenue (MRR) is a calculation of your normalized (amortized), monthly subscription revenue. If your SaaS pricing model uses a monthly subscription, your MRR is simply the total of all your customers’ subscriptions. If you have annual subscriptions, you should divide these by 12 to calculate MRR.
What is committed monthly recurring revenue (CMRR)?
CMRR for a SaaS business is a projection of MRR in a future period, modified to take into account any guaranteed revenue expansion or anticipated churn over the period.
CMRR is similar to MRR but gives us a more realistic projection of monthly revenue, accounting for adjustments to recurring revenue that we already know about.
Remember: this is not guaranteed monthly recurring revenue! It’s predicted with as much knowledge as SaaS companies have available to them.
What’s included in CMRR?
- MRR! You still need to include the core MRR of your business.
- Guaranteed new business that you know about for the period – e.g. If a customer has signed a contract for an account with you which only comes into effect in the following month – you can include this New Business MRR in your CMRR calculation.
- Guaranteed account expansion from upgrades that you know will take place in the period – e.g. If a customer is on a plan that requires them to upgrade after a certain time, this is expected Expansion MRR that you should include in your CMRR calculation.
- Anticipated churn for the specified period – e.g. A customer has stated that they don’t intend to renew their account in the following month, so you can factor this as churn in your CMRR calculation. Note: This churn is not 100% guaranteed – you still have the chance to engage with your customer and prevent the churn!
- Anticipated downgrades for the specified period – e.g. You expect the customer to downgrade their account, due to either the customer stating so, or to features of your pricing model.
When can you use CMRR?
Committed Monthly Recurring Revenue (CMRR) is always a forward-looking metric, i.e. it’s only applicable when calculated for future time periods, where you have potential expansion and churn that hasn’t happened yet.
Because of this, CMRR paints a more realistic picture of a recurring business. Particularly in the case of a high churn rate, CMRR would produce a slightly more pessimistic outlook – taking into account the anticipated churn (although additional revenue from expansion may balance this out).
Here are some uses of this metric:
- CMRR appears to be more of a “VC metric” – i.e. something that investors would want to see, particularly as an indicator of the health of a business, based on projections.
- As Philippe Botteri (Accel Partners) mentions, breaking down the average CMRR by different dimensions (such as per customer) can lead to a more insightful analysis.
- Christoph Janz (Point Nine Capital) also mentions that CMRR is more relevant for enterprise-targeted businesses, where the sales cycles are typically much longer and the need for such projections are greater. Smaller SaaS startups selling mainly monthly deals to SMBs may not find so much use in the metric.