Committed Monthly Recurring Revenue (CMRR)
Why it matters
Billing lags signing. A business can close a strong batch of annual contracts in the last week of a quarter and still show flat revenue for weeks, because invoices start later. Looking only at billed revenue, a team could read a slow month as a slow quarter, hold back on a hire it can afford, or tell an investor a weaker story than the contracts support.
The reverse also holds. A customer who has given notice is still in current MRR until they leave, and CMRR removes them early. That makes CMRR a more honest view of where revenue is heading over the next few months.
How to apply it
- List every signed contract, including those not yet invoicing.
- Add contracted expansions and known price changes with their start dates.
- Subtract confirmed cancellations and downgrades.
- Leave out anything unsigned, and anything on a free trial that has not converted.
- Report CMRR next to current MRR and show the gap, so a promise is never mistaken for cash.
- Check the gap each month, and investigate if signed contracts take longer than expected to start billing.
What it is
Monthly recurring revenue (MRR) counts what is billed right now. CMRR counts what is already promised. The usual calculation starts with current MRR, adds new contracts that are signed but not yet live, adds agreed expansions and price rises that have not started, and subtracts customers who have formally given notice to leave.
The test is the signature. A deal still in negotiation does not count, however likely it feels.
Common mistakes
- Counting verbal agreements.
- Treating CMRR as cash. It does not say when the money arrives, and Runway still depends on the timing.
