Key Takeaways

• Opening MRR plus new business plus expansion plus reactivation, minus contraction and churn, must equal closing MRR exactly. A gap means the report dropped a movement.

• A customer who downgrades $250 on one plan and adds $630 of seats on another posts two subscription-level movements or one net $380 expansion, by reporting level.

• Usage revenue billed in arrears restates prior months, because the movement takes the service period's start date and the invoice lands after that period ends.

• ChartMogul's 2021 to 2022 platform data put expansion at 36.1% of MRR added above $1M MRR and 7.9% for companies with ARPA under $10 a month.

Which movement category does a customer's change belong in when it's both an upgrade and a downgrade?

Pick a reporting level first, because the level decides the answer. At the subscription level each change stands alone, so a mixed month posts a contraction and an expansion. At the customer level, one account's changes inside the interval collapse into a single movement classified by the sign of the net change.

Closing MRR is identical either way. Only the category lines and account counts move, which is why a board deck and a churn review can quote different contraction numbers from one ledger.

Once you net at the customer level, ChartMogul's precedence rules handle the rest:

• New business or reactivation wins, unless the account also cancels its last subscription inside the interval, which makes it Subscribed & Churned.

• Cancelling the last subscription is churn. Cancelling one of several is contraction.

• Surviving existing customers fall into expansion or contraction on the sign of the net change.

• A switch between equally priced plans is a Neutral movement, not a zero-value expansion.

• A discount counts as contraction, and a discount expiring counts as expansion.

How do you reconcile opening MRR to closing MRR so the waterfall ties out to the penny?

Treat the waterfall as an accounting identity, not a chart. Opening MRR plus the three inflows minus the two outflows equals closing MRR with no plug line. A gap means the report dropped or double-counted a movement.

The five movements sum to $38,970.00, exactly the difference between the endpoints. That check catches most reconciliation bugs before the drilldown.

What breaks the tie-out, and the fix inside the movement model:

1. Reports sweep one-time fees, setup charges, and overage true-ups in as expansion. None of them recur, so they belong outside MRR.

2. A cancel-and-repurchase logs as churn plus reactivation when the customer never left. Link the two subscriptions and it reads as expansion.

3. Movements dated to the invoice instead of the service period land in the wrong billing period.

Where does usage-based revenue land when it swings without any plan change?

Metered revenue still lands in expansion or contraction, because the categories key off the change in MRR, not a plan event. A customer whose token spend rises $400 with no upgrade posts $400 of expansion, then contraction the month usage falls back. That's mechanically correct and strategically noisy, since nothing about the account changed.

Splitting fixed from variable makes the noise readable. ChartMogul's docs recommend separate plans, so a customer with a platform fee plus usage appears as two subscriptions and the waterfall segments by which half moved.

Arrears billing adds wrinkles fixed-price reporting never hits:

• Each movement takes the service period's start date, so a November invoice for October usage restates October. Metrics stay provisional until invoicing closes.

• New usage customers sit as leads until their first invoice exists, so new business lands a month after signup.

• Arrears subscriptions read as perpetually past due, and those keep contributing to MRR until somebody cancels them. Auto-churn windows need roughly 15 days of padding beyond the billing frequency.

• Earned but uninvoiced revenue sits as unbilled revenue at close, a separate question from categorization. Usage-based revenue recognition covers that side.

I keep committed and metered revenue on separate waterfalls. A contraction line driven by seasonal API traffic says nothing about retention, and mixing it with real downgrades hides both.

Related terms

The movement categories feed a small set of metrics that read best together:

• Gross revenue retention uses only the contraction and churn lines, ignoring the three inflows.

• Net revenue retention collapses these same five categories into one ratio, which is why a waterfall that ties out has to come first.

• Revenue churn is the churn movement expressed as a rate against opening MRR.

• Contracted ARR gives a movement report its starting base when contracts rather than invoices are the source of truth.

• Involuntary churn is churn MRR that nobody chose, caused by a failed payment rather than a cancellation.

• Unbilled revenue is earned revenue sitting outside any invoice, and it's the usual reason a usage waterfall looks short at month end.

FAQ

What's the difference between MRR movements and net new MRR?

Net new MRR is one number, and MRR movements are the five categories that add up to it. Net new MRR of $38,970 says the month grew. The movements say it grew on $38,400 of new business against $27,380 of losses.

Do one-time fees belong in MRR movements?

No. Setup fees, professional services, and one-off overage charges aren't recurring, so they stay out of MRR and out of every movement category. Sweeping them into expansion inflates growth one month and creates a phantom contraction the next.

Is reactivation the same as new business?

No. Reactivation is a previously churned customer returning to a paid plan, and new business is a first-ever subscription. Reactivation runs 9% to 13% of MRR added across growth stages in ChartMogul's 2021 to 2022 platform data, so counting it as new business overstates acquisition.

How often should teams review MRR movements?

Monthly, aligned to the close: a customer-level view for the trend, a subscription-level drilldown for anything that looks wrong. Usage-heavy books need that review scheduled after invoicing completes, since arrears restates the prior month.