Understanding MRR movements
A core element of ChartMogul Subscription Analytics is helping you analyze changes to your monthly recurring revenue (MRR). To do this, ChartMogul calculates the monthly recurring revenue for each active subscription and watches for changes (movements) to the subscription’s MRR.
The value of each MRR movement is the net change (difference) in MRR. Summing the value of all previous MRR movements produces a subscription’s current MRR. Read more about the lifecycle of a subscription in ChartMogul.
ChartMogul generates MRR movements from invoice data and manual subscriptions and uses them as the basis for nearly all metrics and analytics. You’ll find them throughout ChartMogul, including in the Chart Data table and in each customer’s record.
If your billing system sends this data, you'll see MRR movements dated in the future that come from scheduled subscription events.
Smart Activity Classification
By default, ChartMogul groups MRR movements for certain subscription changes (activities) that take place within a specified period of time (e.g., 60 minutes) of each other. This does not impact the value of reported MRR.
For example, when a new customer purchases multiple new subscriptions at the same time, ChartMogul classifies them both as a New Business MRR movement (vs. New Business followed by Expansion).
Learn more about Smart Activity Classification and how it affects the classification of New Business, Churn and Reactivation MRR.
Real-time MRR movements
ChartMogul generates an MRR movement when it receives data. Select integrations may have an import delay. For example, App Store Connect and Google Play import subscription-related data once every 24 hours. Delays longer than one day impact the real-time and daily notifications you receive for email, Slack and webhooks. While you may not be notified of these MRR movements, they are still visible in Chart Data, customer records and your billing system.
Resources and further reading:
- Metric: Monthly Recurring Revenue (MRR)
- The Monthly Recurring Revenue Guide for 2021
- A Simplified Method for Forecasting MRR Growth
- Make Metrics Meaningful: how each team relates to MRR
TL;DR
When looking at a customer’s subscription and how it changes over time, keep in mind the following:
- ChartMogul creates MRR movements for subscription events (changes) such as buying or canceling a subscription or changing the number of seats. The value of the movement is the net change in MRR.
- There are six MRR movement types: New Business, Expansion, Contraction, Churn, Reactivation and Neutral movement, depending on the nature of the subscription event.
- MRR movement types may not always be obvious: for example, ChartMogul classifies the reduction in MRR resulting from a discount as Contraction.
- The exact timing of when ChartMogul reports an MRR movement depends on when it receives updated subscription data from your billing system and your Invoice handling setting.
MRR Movement Types
ChartMogul categorizes each MRR movement as one of the following:
New Business
When a customer with a lead status (a non-paying customer) purchases their first subscription, ChartMogul classifies the subscription MRR as New Business and changes the customer’s status to Active.
Expansion
When a customer’s overall MRR increases, ChartMogul classifies this as Expansion. This can be due to upgrading an existing subscription or purchasing an additional subscription. Expansion can also result from an expiring discount.
Prorated upgrade and instant charge |
When you upgrade a customer’s subscription while also prorating the subscription fee for the remaining time in the current billing cycle, ChartMogul registers the Expansion MRR immediately. |
Upgrade and charge at next billing cycle |
When you upgrade a customer’s subscription and wait until the next billing cycle before charging them the higher subscription fee, ChartMogul registers the Expansion MRR at the start of the next billing cycle. |
Instant, prorated upgrade with delayed charge |
By default, if you upgrade a customer’s subscription but delay the prorated charge until the next billing cycle, ChartMogul revises the historic MRR to reflect the upgrade after the customer pays. Depending on your Invoice handling setting, the upgrade may be reflected immediately. |
Contraction
When a customer downgrades an existing subscription or cancels one or more (but not their last) subscription, ChartMogul classifies the net decrease in subscription MRR as Contraction. Contraction can also result from applying a discount.
Contraction through cancellation |
When you cancel one or more (but not the last) of a customer’s subscriptions, ChartMogul registers the Contraction MRR either right away — or — at the end of the service period, depending on your Churn Recognition setting. |
Contraction with prorated downgrade |
When you add a prorated credit to the customer’s account in your billing system, and they don’t immediately issue an invoice, ChartMogul revises the MRR for the period when it learns about the contraction (when the invoice is created). |
Churn
When a customer cancels their last (or only) subscription, ChartMogul classifies the lost subscription MRR as Churn and changes the customer’s status to Cancelled.
Adjust the Churn Recognition setting to recognize churn when the subscription ends in your billing system or at the end of the final service period.
Customers may show as churned in ChartMogul as a result of your Handling Past-due Subscriptions setting. When a subscription auto-churns, the status of the subscription changes in ChartMogul but not your billing system.
Reactivation
When a formerly paying customer (who had previously churned) moves back onto a paid plan, ChartMogul classifies the new subscription MRR as Reactivation and changes the customer’s status to Active.
Neutral
When a customer changes their subscription, but their MRR stays the same, ChartMogul classifies this as a Neutral movement. For example, when someone switches between equally priced plans.
ChartMogul displays Neutral movements:
- When analyzing the MRR Entering/Leaving Segment rows of the ChartData table after applying a plan filter
- In the Subscription History table on a customer record