Net Negative MRR Churn

Net Negative MRR Churn is when a company gains more money from its existing customers upgrading or buying more than it loses from customers canceling or downgrading their subscriptions. This means that even if some customers leave, the company’s overall monthly recurring revenue (MRR) still goes up.

Why Net Negative MRR Churn is Important

Having Net Negative MRR Churn is a great sign for a business because it shows that the company is growing its revenue, not just by getting new customers, but by getting existing customers to spend more.

How to Calculate Net Negative MRR Churn

• Step 1: Calculate the Lost MRR from customers who canceled or downgraded.
• Step 2: Calculate the Expansion MRR from customers who upgraded or bought additional services.
• Step 3: Subtract the Lost MRR from the Expansion MRR. If the result is positive, you have Net Negative MRR Churn.

Formula for MRR Churn:

Net MRR Churn = Lost MRR − Expansion MRR

If this calculation gives you a negative number, it means you have Net Negative MRR Churn.

Why Net Negative MRR Churn Matters

• Revenue Growth: It shows that the company is increasing its revenue even if some customers leave or downgrade. This is important for steady growth.
• Customer Loyalty and Upselling: It indicates that customers are happy and willing to spend more, which is a good sign for the business.
• Business Health: Companies with Net Negative MRR Churn are in a strong position because they’re not just replacing lost revenue—they’re actually growing their income.

Net Negative MRR Churn vs. Positive MRR Churn:

• Net Negative MRR Churn: When the company’s overall MRR goes up because the revenue from customers spending more is greater than the revenue lost from churn.
• Positive MRR Churn: When the company is losing more revenue from churn than it is gaining from expansions, causing its overall MRR to go down.