Key Takeaways
MRR (monthly recurring revenue) is the predictable income your business collects each month from active subscriptions or contracts.
You calculate it by multiplying your number of paying customers by the average revenue per user (ARPU), and it excludes one-time fees.
Airwallex helps businesses protect their MRR with built-in subscription billing, payment recovery, and support for 160+ local payment methods.
What is MRR? It stands for monthly recurring revenue, which is the amount of money your business can count on receiving every month from customers on a subscription or contract.
If you run a SaaS product, a membership platform, or a retainer-based service, MRR tells you how predictable your income really is.
This guide covers what MRR is, how to calculate it in ringgit, and how it differs from annual recurring revenue (ARR).
What is monthly recurring revenue (MRR)?
Monthly recurring revenue (MRR) is the predictable revenue your business earns each month from active subscriptions or recurring contracts. It measures the recurring income you can expect each month, rather than one-off sales or payments.
MRR only includes recurring revenue. For example:
A customer paying RM99 a month for your software counts towards MRR.
A one-time setup fee, consulting project, or product purchase does not.
By excluding one-off revenue, MRR gives you a clearer picture of the recurring income your business generates each month.
That's important because one-off sales can make your revenue look stronger than it really is. For example, a large upfront project might boost revenue in a particular month, even if your subscriber base is shrinking. MRR removes those fluctuations and focuses on the revenue you can expect to repeat month after month.
MRR isn't an official accounting metric, so businesses may calculate it slightly differently depending on what they include. However, the core principle is the same: MRR measures predictable monthly recurring revenue and excludes one-off income.
How to calculate MRR
The MRR formula is simple once you know which numbers to plug in. You need your total count of paying customers and how much each one pays you on a monthly basis.
The MRR formula
MRR = Number of paying customers × Average Revenue Per User (ARPU)
If your customers pay different amounts, calculate the recurring revenue for each customer first, then add up all those figures for your total MRR. For customers on quarterly or annual plans, divide their contract value by the number of months it covers before adding it in.
Worked example
Say your business has 80 subscribers. Fifty pay RM150 a month, and thirty pay RM300 a month on a higher-tier plan.
50 customers × RM150 = RM7,500
30 customers × RM300 = RM9,000
Total MRR = RM16,500
If one of your annual-plan customers pays RM3,600 upfront for a 12-month contract, you'd add RM300 to your MRR for that customer, since RM3,600 divided by 12 months equals RM300 a month.
Once you have this figure, multiply it by 12 to get your annual recurring revenue (ARR), which in this case would be RM198,000.
5 different types of MRR
Your total MRR moves for different reasons each month. Breaking it down into these categories helps you understand where growth is coming from and where you're losing recurring revenue.
Here’s a quick overview:
MRR type | What it measures | Impact on MRR |
|---|---|---|
New MRR | Revenue from new customers | Increases MRR |
Expansion MRR | Additional revenue from existing customers upgrading or buying add-ons | Increases MRR |
Contraction MRR | Revenue lost when customers downgrade | Decreases MRR |
Churned MRR | Revenue lost when customers cancel | Decreases MRR |
Net New MRR | Overall change after gains and losses | Shows whether MRR grew or shrank |
1. New MRR
New MRR is the recurring revenue you gain from customers who signed up during that month. If five new customers each start paying RM200 a month, your new MRR is RM1,000.
2. Expansion MRR
Expansion MRR is the extra recurring revenue existing customers add on, usually by upgrading to a higher plan or adding paid features. If a customer moves from RM100 to RM150 a month, that's RM50 of expansion MRR.
3. Contraction MRR
Contraction MRR is the recurring revenue you lose when existing customers downgrade to a cheaper plan but stay subscribed. This is a softer warning sign than churn, but still worth watching closely.
4. Churned MRR
Churned MRR is the recurring revenue you lose entirely when a customer cancels their subscription. A rising churned MRR usually points to a problem with your product, pricing, or customer experience that needs attention.
5. Net New MRR
Net new MRR measures the overall change in your monthly recurring revenue after accounting for new customers, upgrades, downgrades, and cancellations. It's the clearest indicator of whether your subscription business is growing or shrinking.
MRR vs ARR: what's the difference?
Monthly recurring revenue (MRR) and annual recurring revenue (ARR) measure the same recurring revenue over different time periods.
MRR shows the recurring revenue your business generates each month, while ARR is your annual recurring revenue, calculated by multiplying MRR by 12.
The right metric depends on what you're measuring:
MRR is better for tracking month-to-month growth, monitoring churn, and measuring the impact of pricing or customer changes.
ARR is better for annual planning, setting business targets, and reporting to investors or your board.
Both are management metrics rather than accounting metrics. They help founders and finance teams understand the health of a subscription business, but they aren't the same as recognised revenue reported in your financial statements.
Why MRR matters for Malaysian businesses
For Malaysian businesses that rely on recurring revenue, MRR is one of the most important metrics to track. It provides a clearer picture of subscription performance than total monthly revenue alone. Here’s why MRR matters:
1. Better cash flow planning
Knowing how much recurring revenue you can expect each month makes it easier to plan hiring, marketing, inventory, and other operating expenses with greater confidence.
2. Spot problems earlier
A strong month of one-off sales can hide a shrinking subscriber base. MRR focuses on recurring revenue, making it easier to identify slowing growth or rising churn before they become bigger problems.
3. A key metric for investors
If you're raising funding, MRR is one of the first metrics investors look at. A growing MRR shows that your subscription business is attracting and retaining customers, making it a stronger indicator of long-term growth than one-off sales.
Collecting recurring revenue across currencies
If you bill customers outside Malaysia, MRR becomes harder to track. Payments may arrive in USD, SGD, EUR, and other currencies, making it difficult to monitor recurring revenue and reconcile payments across multiple accounts. That’s where Airwallex comes in.
With Airwallex, you can:
Manage multi-currency recurring revenue. Airwallex provides local currency accounts in 20+ currencies, so overseas customers can pay you like a local business while you decide when to convert funds.
Hold funds in the currency they're paid in, giving you control over when you convert them instead of being forced into automatic FX conversion.
Keep track of your monthly recurring revenue, active subscriptions, and overdue payments from a single dashboard.
Pay overseas suppliers and contractors directly from your foreign currency balances, avoiding unnecessary FX conversions.
Frequently asked questions (FAQs)
What does MRR stand for?
MRR stands for monthly recurring revenue: the predictable income a business earns each month from active subscriptions or recurring contracts.
Is MRR the same as revenue?
No. MRR only counts recurring subscription income, while total revenue also includes one-time sales, refunds, and non-recurring fees.
What is a good MRR growth rate?
There's no single benchmark, since it depends on your stage and market. What matters is a steady upward trend where churn isn't quietly eating into your gains.
Can MRR apply to businesses that aren't SaaS?
Yes. Gyms, membership platforms, and agencies on monthly retainers can track MRR the same way a software company does. Airwallex supports recurring collections for these businesses too, not just SaaS.
How often should you review your MRR?
Most businesses review MRR monthly alongside churn and new customer numbers. If you bill in multiple currencies, check it more often to spot FX-driven swings.
This publication does not constitute legal, tax, or professional advice from Airwallex nor substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency. This publication is not intended to be relied on for the purpose of making a decision about a financial product and users should verify details independently.
All comparisons and information contained in this publication reflect only Airwallex’s own research using public documentation on the stated dates and have not been independently validated.
Product features, pricing and other details are subject to change. All third-party names, products, and logos are trademarks of their respective owners and are referred to for identification and compatibility purposes only. If you would like to request an update, feel free to contact us at [[email protected]].
Airwallex (Malaysia) Sdn. Bhd., a company incorporated under the laws of Malaysia with company registration number 201801007747 (1269761-X), is regulated as a licensed remittance business under the Money Services Business Act 2011 (Licence number 00743 with an expiry date of 3 August 2028, an E-Money Issuer and a registered merchant acquirer under the Financial Services Act 2013.)
Cherie Foo
Growth Content Manager
Cherie is a Growth Content Manager at Airwallex, where she develops content for businesses in Singapore and across Southeast Asia. She focuses on turning complex topics like cross-border payments, business accounts, and spend management into clear, practical guides that help founders and finance teams make confident decisions.
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