MRR and ARR measure exactly the same thing, your recurring revenue, at two zoom levels. MRR is the monthly view, ARR is the annual view, and ARR is simply MRR times twelve. So the real question is not which number is correct. It is which number is right for the job in front of you.
The short answer
Run the company on MRR. Talk about the company in ARR. Track both from the same source so they can never disagree.
Side by side
| MRR | ARR | |
|---|---|---|
| Time scale | Monthly | Annual |
| Best for | Operating decisions | Fundraising, benchmarks |
| Reacts to change | Within a month | Slowly, by design |
| Audience | You and your team | Investors, press, board |
| Typical stage | Pre-seed to Series A | Series A and later |
| Contract style it fits | Monthly plans | Annual contracts |
Why operators live in MRR
A month is short enough to act on. Churn that starts in March is visible in March's movements, while the annual view dilutes it into a rounding error for most of the year. Every operating decision that depends on revenue, runway math against your burn rate, pricing changes, hiring pace, reads better at monthly resolution.
MRR also decomposes cleanly into new, expansion, contraction, and churned revenue, which is where problems announce themselves early. ARR has the same anatomy, but nobody diagnoses a monthly leak with an annual chart.
Why investors live in ARR
Valuation multiples, benchmark reports, and funding headlines are all quoted against ARR. "€1M ARR" is a milestone the whole industry recognizes; "€83,333 MRR" is the same company described in a way nobody benchmarks. When your buyers sign annual contracts, ARR is also closer to the shape of the actual cash: a sales-led B2B company closing €24,000 yearly deals thinks in contract values, not twelfths.
So when you write the investor update, convert. When you plan next month's spending, convert back.
The conversion traps
Annualizing a spike. One great month times twelve is not ARR. If March included a burst of one-time fees or usage overages, multiplying it annualizes the luck. Only recurring subscription revenue converts.
Counting multi-year totals. A three-year €36,000 contract is €12,000 of ARR. Diligence unwinds the other version quickly, and the correction is embarrassing at exactly the wrong moment.
Mixing the two mid-sentence. Comparing this quarter's ARR to last quarter's MRR growth rate produces nonsense that sounds precise. Pick the zoom level per audience and stay in it.
Letting them drift apart. If MRR and ARR are maintained in two different spreadsheets, they will eventually disagree, and the discrepancy always surfaces in front of someone important. One subscription list should produce both numbers; the free MRR calculator does exactly that, and inside Plainhub both stay current automatically as you record customers.
The rule of thumb
If the decision affects what you do this month, use MRR. If the sentence will be read by someone outside the company, use ARR. And if the two numbers in your deck cannot be derived from each other by multiplying by twelve, fix that before anyone else notices. For quick reference, the one-sentence definitions with benchmarks live in the glossary: MRR and ARR.