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Month-over-month (MoM) measures, such as monthly changes in recurring revenue, are commonly used to analyze software as a service (SaaS) companies.
Quarterly and annual metrics are also important, but MoM changes can help you quickly determine if your business is moving in the right direction. One commonly tracked metric is the net monthly recurring revenue (MRR) growth rate, which you can also use to help determine when your company will become profitable.
You calculate your MoM net MRR growth by taking the current month's net MRR, subtracting last month’s net MRR, and dividing the result by last month’s net MRR. You can multiply by 100 to get the percentage change. You can also take a deeper dive into specific metrics, such as expansion MRR or net MRR churn rates on a MoM basis.
Investors may also want to see your compounded monthly growth rate (CMGR), which measures the periodic monthly growth rate over a longer period.
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