With subscriptions, it's important to understand the monthly developments of your subscriptions. Revenue for a given month can only be fully determined after the month has ended. Therefore, the subscription report is always updated up to and including the previous month.
Monthly revenue from subscriptions is determined by the sum of the Monthly Revenue* from the previous month and the Net New Monthly Revenue.
*In the case of annual subscriptions, 1/12 of the annual revenue is shown. For quarterly and semi-annual subscriptions, the conversion is similar.
The Net New Monthly Revenue from subscriptions consists of the following components:
Monthly Revenue from New Customers: shows the monthly revenue from new subscriptions and the number of new subscriptions.
Monthly Revenue from Expansions: shows the monthly increase in revenue and the number of subscriptions that have increased in size. These subscriptions were already active but have increased in quantity or price.
Monthly Revenue from Renewals: shows the monthly decrease in revenue and the number of subscriptions that have decreased in size. These subscriptions are still active.
Monthly Revenue from Cancellations: shows the lost revenue due to terminated subscriptions.
Cancellations: gives the sum of monthly revenue from new customers, expansions, cancellations, and terminations.
The values for each of these components are listed in their own row in the table below the chart.
In addition to showing how monthly revenue is composed, the table also includes the following:
Monthly Revenue (MRR): This is perhaps the most important KPI for subscriptions. It represents your MRR, the Monthly Recurring Revenue, which stands for your recurring monthly revenue.
Annual Revenue (ARR): This is the yearly equivalent of the MRR. It is calculated by multiplying the current MRR by 12. If your subscriptions were to remain unchanged, this is the revenue you would generate in the coming year. (Note: the coming year, not until the end of this calendar year.) It also assumes that subscriptions will continue. Any known end date is not taken into account.
Average Customer Value: shows the average MRR per customer. It is calculated by dividing the MRR by the number of active customers. This KPI is also often referred to as ARPA (Average Revenue Per Account).
Customer Churn Rate: the percentage of customers who cancelled their subscription during this month.
Revenue Churn (MRR Churn Rate): the percentage of revenue lost due to cancellations.
Customer Lifetime (months): the expected number of months a customer remains. (1 / customer churn rate)
Customer Lifetime (years): the expected number of years a customer remains.
Customer Lifetime Value: the average revenue per customer over their entire customer lifetime.
KPI | Definition | Formula |
Monthly Recurring Revenue (MRR) | The monthly recurring revenue from subscriptions. | - |
Annual Recurring Revenue (ARR) | The annual recurring revenue from subscriptions. | ARR = MRR × 12 |
Average Revenue per Account (ARPA) | The monthly recurring revenue divided by the number of customers. | ARPA = MRR / number of customers |
Customer Churn Rate | The percentage of customers who cancel within a given month. | - |
MRR Churn Rate | The percentage of revenue lost due to cancellations. | MRR churn rate = - (Cancellations / MRR) |
Customer Life Time in months (CLT_m) | The expected number of months a customer stays. | CLT_m = 1 / Customer churn rate |
Customer Life Time in years (CLT_y) | The expected number of years a customer stays. | CLT_y = CLT_m / 12 |
Customer Life Time Value (CLTV) | The average revenue per customer over their entire customer lifespan. | CLTV = ARPA / Customer churn rate |