Skip to main content

​
Overview

Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) are the core operational metrics used to measure the normalized predictable revenue generated by active subscriptions. Salesbricks reports recurring revenue across three primary views:
  • Monthly Revenue Report: High-level monthly run-rate segmented by revenue type (Recurring, Non-Recurring, Usage, Overage, and Milestone).
  • Customer MRR Report: Customer-level recurring revenue grid showing active subscription MRR or ARR month-over-month.
  • Brick MRR Report: Product- and Brick-level recurring revenue grid detailing subscription line items.
In Salesbricks, MRR and ARR measure in-force operational contract run rates. They reflect the steady-state monthly value of active customer commitments rather than invoice cash receipts or GAAP/ASC 606 deferred revenue recognition schedules.

​
Core Formulas

​
Monthly Recurring Revenue (MRR)

For any recurring line item on an active contract, MRR is calculated using whole calendar month normalization:
Where:
  • Net Recurring Non-Prorated Total: The full-period recurring amount of the line item before daily proration, minus:
    • Line-level sales discounts (percentage or fixed discount).
    • Line-level one-time discounts.
    • Contract discounts (renewing and non-renewing) allocated across the contract term.
    • Duration discounts (free-months waivers).
  • Service Window Months: The duration of the line item or ramp phase measured in whole calendar contract months (arr_span_months). For an annual contract, this is 12; for a quarterly contract, 3; for a monthly contract, 1.
  • floor(...): Integer division rounded down to the nearest currency cent, preventing fractional-cent rounding overstatements.
Why non-prorated totals? If a customer begins a 12-month agreement on September 15th, their first partial calendar month is billed on a prorated basis, but their ongoing subscription commitment is $1,200/year. Using the non-prorated total ensures their ongoing monthly run rate reflects $100/month rather than an artificially depressed $50 figure.

​
Pre-Discount MRR

Pre-Discount MRR reflects the gross monthly run rate of the subscription before any sales or contract discounts are applied:

​
Annual Recurring Revenue (ARR)

Depending on context, “ARR” can refer to three distinct calculations in subscription business models. Salesbricks clearly differentiates between them:

​
1. Report ARR (“Show as ARR”)

In the Customer MRR Report and Brick MRR Report, toggling Show as ARR converts the active monthly run rate into an annualized figure:
This represents the annualized run-rate currently in effect for that month.

​
2. Order Form ARR

Displayed alongside Total Contract Value (TCV) on the order form and in closed-won notifications (and used as the fallback for open deals in CRM before revenue sync has run):
  • Contracts of 12+ months: Represents the weighted recurring commitment over the first 12 contract months, net of all discounts in force during those months. For multi-year agreements with ramps or phases, it blends the line items active across the first 12 months weighted by their duration.
  • Contracts under 12 months: Annualizes the recurring contract total across the agreement’s duration ((Recurring Total / Contract Months) * 12).
Rounding comparison with Report ARR: Order Form ARR annualizes from the unrounded line total (floor((Net Total / Months) * 12)), whereas Report ARR (“Show as ARR”) multiplies the already-floored monthly MRR by 12 (floor(Net Total / Months) * 12). Because of per-month cent flooring, a flat $10,000/year line item reports $10,000.00 in Order Form ARR, while its $833.33 monthly MRR displays as $9,999.96 under Show as ARR.

​
3. Exit ARR (Current ARR)

Exit ARR (stored as post_discount_arr and synced to CRM once revenue sync has run) measures the annualized run rate of the subscription’s latest active earning month. Rather than multiplying a rounded monthly MRR by 12, it is computed per recurring line item from the unrounded period total and summed across the latest non-zero earning month:
Non-renewing discounts (one-time discounts and non-renewing contract discounts) are deducted from Exit ARR during the active term so that the step-up in price when those discounts expire at renewal is recognized as expansion/growth at renewal, rather than being priced into ARR ahead of time.
Exit ARR vs. Renewable MRR: In the underlying revenue table, renewable_mrr is a separate monthly field (Pre-Discount MRR - Sales Discount - Renewing Contract Discount) used to forward-fill active MRR continuation in reports, and does not equal Exit ARR / 12.

​
Revenue Classification Matrix

Not all contract charges represent recurring revenue. The matrix below defines how Salesbricks classifies different order elements:

​
Lifecycle & Timing Rules

​
Month-End Snapshot Rule

Salesbricks reports recurring revenue using a month-end snapshot model:
  • The MRR/ARR reported for any given calendar month reflects the active subscription status on the final calendar day of that month.
  • Mid-month cancellations or pauses that take effect before month end will result in $0 MRR for that month.
  • An agreement starting on the 20th of a month is evaluated on the final day of the month as active, recording its normalized monthly run rate.

​
Paused Subscriptions

When a subscription is paused:
  • If the subscription is paused as of month end, all recurring revenue fields (pre_discount_mrr, post_discount_mrr, renewable_mrr) are recorded as $0.
  • Invoiced amounts that occurred prior to the pause boundary remain preserved in invoice receivable and billing reports.

​
Active MRR Continuation (Future Projections)

For active subscriptions that have not yet reached their end date:
  • When viewing future months beyond an active agreement’s scheduled ends_at date, MRR reports forward-fill those future months using the agreement’s Renewable MRR (renewable_mrr, which excludes non-renewing discounts) under a going-concern assumption.
  • Once an agreement’s ends_at date actually passes without a closed renewal, the order is marked as ended (ended_at), future continuation is zeroed out ($0 MRR), and the subscription enters the Lapsed state in Reports & Charts.

​
Ramped & Phased Agreements

For agreements structured with multiple pricing phases or ramping quantities:
  • Each phase is evaluated against its own specific service window duration (arr_span_months).
  • Rather than blending multi-year total contract value evenly across the entire contract, Salesbricks reports the exact in-force run rate corresponding to each phase’s active date window.

​
Multi-Currency Support

  • Subscriptions maintain their native contract currency (e.g., USD, EUR, GBP).
  • In the Customer MRR and Brick MRR reports, line items and subtotals are grouped and totaled by their native transaction currency to prevent artificial exchange-rate fluctuations.

​
Reconciliation FAQ

​
Why does Salesbricks MRR differ from our CRM (Salesforce / HubSpot)?

Traditional CRM deal desks often calculate annual contract value by taking Total Contract Value (TCV) and dividing it evenly by the contract term in years:
  • Example: A 2-year ramped contract with $10,000 in Year 1 and $20,000 in Year 2 (Total $30,000).
  • CRM Approach: Averages the contract at $15,000/year ($1,250/month) throughout both years.
  • Salesbricks Approach: Reports actual in-force run rate: $833/month ($10,000 ARR) in Year 1, stepping up to $1,666/month ($20,000 ARR) in Year 2.
Salesbricks reflects what the customer is contracted to pay during each specific month.

​
Why does Salesbricks MRR differ from Stripe Billing or ChartMogul?

Some billing engines compute MRR by deriving a daily rate and multiplying by the number of days in the month:
Under this method, February displays lower MRR than January for the exact same subscription. Salesbricks uses calendar month normalization (Net Total / Service Window Months). An annual $12,000 subscription reports exactly $1,000 MRR in February, March, and April.

​
How does MRR relate to GAAP / ASC 606 Revenue Recognition?

MRR is an operational commercial metric, not a statutory accounting measure.
  • MRR / ARR: Measures the ongoing annualized value of recurring customer contracts under active management.
  • GAAP / ASC 606: Recognizes revenue as performance obligations are satisfied over time, amortizing prepaid balances from deferred revenue accounts.
  • While MRR and recognized subscription revenue often trend together, one-time fees, mid-period service delivery timing, and contract modifications create standard differences between operational MRR and recognized accounting revenue.