Monthly recurring revenue (MRR) churn is a crucial metric for subscription-based businesses because it measures the amount of recurring revenue lost due to customer churn. There are two key types of MRR churn to understand:

• Gross MRR churn refers to the total revenue lost from customers who churned or downgraded their subscription during a given period.
• Net MRR churn accounts for both the lost revenue and any additional revenue gained from existing customers who upgraded or expanded their subscriptions. As a result, net MRR churn can sometimes be lower — or even negative — if the revenue gained from upgrades exceeds the revenue lost from churned customers.

Understanding the difference between these two types of churn helps businesses assess the overall health of their recurring revenue streams. High gross MRR churn indicates significant revenue loss, while a low or negative net MRR churn shows that the business is successfully retaining and growing its customer base.