What is CMRR?

Committed Monthly Recurring Revenue (CMRR) is a metric that extends the concept of MRR by accounting for known future changes in subscription revenue. It includes:

• New Bookings: Revenue from newly acquired customers with signed contracts.
• Expansion MRR: Additional revenue from existing customers through upsells or cross-sells.
• Churned MRR: Revenue anticipated to be lost due to known cancellations or downgrades.

By integrating these elements, CMRR offers a more comprehensive view of expected monthly revenue, enabling finance teams to anticipate and plan for future financial scenarios.

Calculating CMRR

The formula for CMRR is:

CMRR = Current MRR + New Bookings + Expansion MRR – Churned MRR

Example:

Assume your current MRR is $100,000. This month, you’ve secured $10,000 in new bookings and $5,000 in expansion MRR, but you’re aware of $3,000 in upcoming churn. Your CMRR would be:

$100,000 + $10,000 + $5,000 – $3,000 = $112,000

This calculation indicates an expected increase in monthly revenue to $112,000, providing a clearer picture of future financial health.

Why CMRR Matters

Tracking CMRR is vital for several reasons:

• Enhanced Forecasting Accuracy: CMRR accounts for imminent changes in revenue, allowing for more precise financial projections.
• Investor Confidence: Demonstrating a solid grasp of future revenue streams can bolster investor trust and support fundraising efforts.
• Strategic Decision-Making: Understanding expected revenue enables informed decisions regarding resource allocation, hiring, and growth initiatives.

By focusing on CMRR, finance leaders can proactively manage the company’s financial trajectory, rather than reacting to past performance.

CMRR vs. MRR

While both metrics are crucial, they serve different purposes:

• MRR provides a snapshot of current recurring revenue, reflecting the present state of the business.
• CMRR offers a forward-looking view by incorporating known future changes, making it more suitable for strategic planning.

Understanding both metrics allows for a balanced approach to assessing current performance and preparing for future developments.

Automating CMRR Tracking with TrueRev

Manually calculating CMRR can be labor-intensive and prone to errors, especially as your customer base grows and contracts become more complex. TrueRev simplifies this process by automating the tracking of MRR, CMRR, and other key financial metrics. Our platform integrates seamlessly with your existing billing systems, providing real-time insights and reducing the risk of manual errors.

Benefits of using TrueRev include:

• Real-Time Data: Access up-to-date financial metrics at any time.
• Accuracy: Reduce errors associated with manual calculations.
• Efficiency: Free up valuable time for your finance team to focus on strategic initiatives.

By leveraging automation, you can ensure that your financial planning is based on accurate and timely data, empowering better decision-making.