Subscription Metrics

invoiced includes analytics and reports to help you understand the health of your recurring revenue business you can track common subscription key performance indicators (kpis) like monthly recurring revenue (mrr), customer lifetime value (ltv), churn, and more available charts invoiced includes the following subscription metric reports out of the box many of these reports support segmentation (month, customer, plan) and filtering monthly recurring revenue annual recurring revenue mrr movements total subscribers churn average sale price lifetime value net revenue retention custom reports if you have access to the report builder then you can build custom mrr reports with your own filtering and segmentation, as well as drill down into the line item level detail behind mrr you can use the mrr item and mrr movement reporting data types to do this how mrr is calculated monthly recurring revenue (mrr) is the basis for tracking recurring revenue on invoiced, mrr is derived from recurring line items that were billed a recurring line item is any line item that has an associated subscription plan and a service period the mrr of each line item is normalized depending on the plan interval if the line item is prorated then the service period is an additional factor used to convert the billed amount to mrr we only track mrr for what has been billed to a customer subscription events such as upgrades and cancellations are derived from line items and not from the subscription itself for example, if a customer was billed $120 for a yearly subscription, then this would add $10 to your mrr for each month covered by the service period subscription metrics are periodically calculated when viewing reports please pay attention to the last calculation date to know whether recent changes were included in your metrics mrr movements mrr movements capture the types of changes that can happen to your mrr as your recurring revenue base grows you would see this reflected as mrr movements we calculate mrr movements from the line items that are billed to customers as your customer's mrr changes month over month we break these down into the specific line items that caused the mrr change there are five different types of mrr movements that we will explain new business expansion contraction lost reactivation new business all mrr in the first month of a customer's relationship with you is considered new business expansion expansion occurs when a customer's mrr increases from the previous month the previous month mrr must be non zero for it to be considered expansion revenue contraction when a customer's mrr decreases from the previous month but has not churned, then this is considered a contraction since this is a decrease in mrr, contraction mrr should be a negative value lost lost mrr is observed when a customer has churned and their mrr has gone to zero since this is a decrease in mrr, lost mrr should be a negative value reactivation reactivation mrr is similar to new business with one important distinction we categorize mrr as reactivation if the customer previously had mrr but had previously canceled reactivation is the first month of mrr that occurs after the customer has canceled metrics these are the formulas we use to calculate each subscription metric that you see in the application, charts and reports annual recurring revenue (arr) \text{arr} = \text{mrr} 12 average revenue per user (arpu) \text{arpu} = \dfrac{\text{mrr}}{\text{total customers}} lifetime value (ltv) \text{ltv} = \dfrac{\text{arpu}}{\text{user churn}} when user churn is 0% then lifetime value then the calculation becomes \text{ltv} = \text{arpu} \text{36 months} user churn \text{user churn} = \dfrac{\text{lost customers}}{\text{starting customers}} revenue churn \text{revenue churn} = \dfrac{\text{lost mrr}}{\text{starting mrr}} growth rate \text{growth rate} = \dfrac{\text{mrr} \text{starting mrr}}{\text{starting mrr}} net revenue retention (nrr) \text{nrr} = \scriptsize{\dfrac{\text{starting mrr}+\text{expansion mrr}+\text{reactivation mrr} \text{contraction mrr}+\text{lost mrr}}{\text{starting mrr}}} average sale price (asp) \text{asp} = \dfrac{\text{new business mrr}}{\text{new customers}}