Committed monthly recurring revenue, abbreviated as CMRR, is an important metric in SaaS that represents the value of the monthly recurring portion of subscription revenue. CMRR excludes revenues that are not recurring, even if such revenues are on a revenue recognition schedule.
CMRR is a derivation of current monthly recurring revenue (MRR) as the two metrics are closely aligned; however, like all other SaaS metrics, there is no “one-size fits all” approach, so for some businesses CMRR/MRR will be identical.
There are many ways to track the health of subscription and SaaS businesses, and there are many opinions among the tech community on which indicators are the more meaningful and why. While there are numerous views on which metrics to track, one thing is certain: all SaaS companies need to have some key performance indicators (KPIs) that show the health of your business, growth rates, and define what these different points of data mean for the business.
From a financial reporting perspective, there are three key SaaS metrics that demonstrate revenue potential and help you see how your company is performing. These metrics are:
- Monthly Recurring Revenue (MRR)
- Committed Monthly Recurring Revenue (CMRR)
- Average Revenue per Customer (ARPC)
CFOs and investment firms seeking startup investment opportunities use this data – MRR, CMRR, and ARPC – to determine how well the company is performing and have a peek at potential future revenue.
What’s the difference between “committed” and “contracted” MRR?
Committed MRR defines the value of the recurring segment of subscription revenue.
Contracted MRR is the value of the contracted monthly recurring portion of subscription revenue. Contracted monthly recurring revenue is closely related to committed monthly recurring revenue; in some businesses, these metrics are identical. The primary difference between committed vs contracted MRR is that contracted MRR includes only contractually guaranteed revenues.
Tracking contracted MRR can help SaaS leaders gain a clearer view of the overall performance and trends of their company.
What is CMRR and how does it help SaaS and subscription businesses in forecasting the recurring revenue?
In SaaS, enterprise business intelligence and business analytics (often called SaaS Intelligence) play an important role in growth. Subscription companies must regularly measure and monitor recurring income to understand the amount they earn from subscription services. The report provides data analytics to enable SaaS service providers to understand what revenue is tapping or has been stopped tapping.
CMRR is not only use internally; it is also frequently used as a baseline value by investment firms or banks in determining how much credit to extend at any given time. The amount of revolving credit extended to SaaS startups, for example, is frequently based on a multiple of CMRR.
Using CMRR and other customer-focused SaaS metrics allows SaaS executives and potential investors to forecast recurring revenue.
What impacts a company’s CMRR and how to calculate committed monthly recurring revenue
There are many revenue streams which can impact a SaaS company’s committed monthly recurring revenue, and each should be taken into account when calculating your CMRR. These are:
Acquired CMRR: The increase in CMRR because of the acquisition of another legal entity’s existing subscriptions and related CMRR balances.
- Timing of event: Acquisition
- Primary revenue stream impacted: New
Add-on CMRR: The increase in CMRR on an existing customer from the sale of additional subscription products or an increase in quantity of existing subscriptions (ex: user count).
- Timing of event: Mid-term
- Primary revenue stream impacted: Expansion
CMRR backlog: The amount of CMRR booked in advance of subscription start date. This value is used to isolate the amount of Active Term CMRR.
- Timing of event: Any
- Primary revenue stream impacted: Any
CMRR cancellation: The decrease (loss) of CMRR from cancelled customers (i.e., those customers that never fully adopted/onboarded).
- Timing of event: Mid-term
- Primary revenue stream impacted: Contraction
CMRR Churn: The decrease (loss) of CMRR from churned customers.
- Timing of event: Mid-term / end of term
- Primary revenue stream impacted: Contraction
Currency change markdown: The decrease in CMRR on foreign transactions due to the combined effect of a change in transactional currency (i.e., prior contract was GBP, and renewal contract is EUR) and derived foreign currency fluctuations.
- Timing of event: Renewal
- Primary revenue stream impacted: Contraction
Currency change uplift: The increase in CMRR on foreign transactions due to the combined effect of a change in transactional currency (i.e., prior contract was GBP, and renewal contract is EUR) and derived foreign currency fluctuations.
- Timing of event: Renewal
- Primary revenue stream impacted: Expansion
De-book: The decrease (loss) of CMRR from debooking of existing subscription (i.e., item-level cancellation during an active subscription period).
- Timing of event: Mid-term
- Primary revenue stream impacted: Contraction
Foreign exchange: The change (increase or decrease) in CMRR on renewals of foreign currency transactions due to exchange rate fluctuations from originating booking to renewal.
- Timing of event: Renewal
- Primary revenue stream impacted: Uncontrollable
Markdown: The decrease in CMRR on an existing customer from a decrease in price (or an increase of discount) on an existing subscription.
- Timing of event: Mid-term
- Primary revenue stream impacted: Contraction
Net contraction: CMRR because of a net decrease in subscription value on an existing customer’s account regardless of individual item activity. Net Expansion CMRR is calculated based on a particular posting day’s net subscription activity for a customer.
- Timing of event: Mid-term / renewal
- Primary revenue stream impacted: N/A
Net expansion: CMRR because of a net increase in subscription value on an existing customer’s account regardless of individual item activity. Net Expansion CMRR is calculated based on a particular posting day’s net subscription activity for a customer.
- Timing of event: Mid-term / renewal
- Primary revenue stream impacted: N/A
New CMRR: The increase in CMRR from new customers.
- Timing of event: New deal
- Primary revenue stream impacted: New
Opening balance: Existing CMRR populated because of Historical Run for which the specific type (e.g., New, Renewal, Addon, etc.) is not tracked, and based on specified Opening Balance Date.
- Timing of event: Historical run
- Primary revenue stream impacted: N/A
Pending renewal: The amount of CMRR up for renewal (available to be renewed) in each month.
- Timing of event: End of term
- Primary revenue stream impacted: N/A
Recovered CMRR: The increase in CMRR from customers who have previously churned and returned.
- Timing of event: New deal
- Primary revenue stream impacted: New
Renewal add-on CMRR: The increase in CMRR on an existing customer from the sale of additional subscription products or an increase in quantity of existing subscriptions (ex: user count) at time of renewal.
- Timing of event: Renewal
- Primary revenue stream impacted: Expansion
CMRR renewal downgrade: The decrease in CMRR on an existing customer from the debooking of existing subscription product or a decreased in quantity of existing subscriptions (ex: user count) at time of renewal.
- Timing of event: Renewal
- Primary revenue stream impacted: Contraction
CMRR renewal markdown: The decrease in CMRR on an existing customer from a decrease in price (or an increase of discount) on an existing subscription at time of renewal.
- Timing of event: Renewal
- Primary revenue stream impacted: Contraction
CMRR renewal uplift: The increase in CMRR on an existing customer from an increase in price (or the reduction of discount) on an existing subscription at time of renewal.
- Timing of event: Renewal
- Primary revenue stream impacted: Expansion
Renewed CMRR: The amount of CMRR for existing subscriptions which were renewed in each month.
- Timing of event: Renewal
- Primary revenue stream impacted: Renewed
Rounding: The net effect of trailing decimals values (less than $.01) because of various CMRR calculations in a given month.
- Timing of event: Any
- Primary revenue stream impacted: Other
Uplift: The increase in CMRR on an existing customer from an increase in price (or the reduction of discount) on an existing subscription.
- Timing of event: Mid-term
- Primary revenue stream impacted: Expansion
How to calculate CMRR (formula examples)
The most basic committed monthly recurring revenue calculation is as follows:
CMRR = MRR + Signed Contracts – Expected Churn
However, for SaaS companies looking to drill down further there are other formulas you can use to calculate CMRR. These can be found below:
Saas KPI Calculations–
Total CMRR: Sum of all CMRR Metrics (Ending Balance) excluding ‘Renewed’ and ‘Pending Renewal’
Active Term CMRR: Total CMRR (Ending Balance) – Pending Renewal CMRR (Ending Balance) – Backlog CMRR (Ending Balance)
Late Renewal CMRR: Pending Renewal CMRR (Ending Balance)
Contraction CMRR: Net Contraction CMRR (Current Month) + Churn CMRR (Current Month) + Cancellation CMRR (Current Month)
Expansion CMRR: Net Expansion CMRR (Current Month)
CMRR per Customer: Total CMRR (Current Month) / Total Customers (Current Month)
Average New Deal CMRR: New CMRR (Current Month) / New Customers (Current Month)
CMRR Growth (Net New): CMRR dollar growth over the prior month
What is SaaS Intelligence?
Sage Intacct SaaS Intelligence is a prebuilt, configurable dashboard that delivers instant insights to guide your business decisions and prove success to your investors.
CMRR metrics in SaaS Intelligence and the benefits of automation
The key SaaS metrics you track must be actionable in order to help you achieve healthy CMRR and ARR growth. This necessitates granularity and immediacy of information, which QuickBooks or Excel spreadsheets cannot provide at scale.
Can you quickly answer questions like “How much of our CMRR growth this month was a result of the success of our renewal price increases on our SMB customers using our Business Intelligence product line?” If you’re unable to immediately access this information, it’s most likely because your manual, business intelligence toolset is impeding you. You can finally break free from your Excel prison and quickly answer these types of critical questions with an automated SaaS metrics dashboard.
One such solution is SaaS Intelligence, a fully automated financial tracking and reporting engine for SaaS and subscription companies, built on Sage Intacct. SaaS Intelligence provides real-time visibility into your SaaS metrics at a level of granularity that Excel or comparable systems cannot detect or measure.
Your ability to track and calculate critical SaaS metrics will be completely seamless, with automatic tracking and bucketing of your critical SaaS metrics by interpreting transactions as they post in real-time. Without your involvement, SaaS Intelligence analyzes the activity and automatically categorizes the CMRR into the appropriate classification.
Related resources
- Sage Intacct Cloud ERP overview: SaaS Accounting Software – the smarter way to manage your SaaS business.
- Sage Intacct solution: SaaS Intelligence – transform reporting with real-time metrics.
- Add-on modules for subscription and SaaS: SaaS Metrics Dashboard – dashboard for CMRR, CAC, Churn, CLTV, and more.
