In this workout, we've been asked to calculate the MRR, the monthly recurring revenues and the ARR annual recurring revenues using the assumptions that we've been provided with these assumptions show that we had 30 customers at the beginning of the month, a 10% growth rate of new customers, a monthly churn rate of 4%, and a starting MRR of 3000.

The price of the subscription is 100 per month.

So if we first of all go through the number of customers that we've got at the beginning of the month, we had 30, we then added 10% to that.

So it's gonna be the number at the beginning of the month, multiplied by the growth rate assumption to give us three new customers.

Our lost customers is gonna be 4% of the opening number for the month as well.

So we're losing 1.2 customers, which obviously doesn't make sense as an individual customer here, but we could scale it up 10 or a hundred times to give us the ending number of customers for the month of 34.2.

From this, we can calculate the MRR.

We're told that the monthly recurring revenue for the prior month was 3000.

That we've got new customers, three of them each generating us 100 per month.

So that's adding 300 to our revenue.

We are losing 4% of the existing MRR.

Let's multiply it by minus one to flip the sign around.

And if we add that all up, it will give us our ending monthly recurring revenue of 3,180.

The annual recurring revenue ARR is just multiplying the monthly number by 12 to give us 38,160.

The second workout here, just ask us to rework the calculation, assuming that we're looking at a hypergrowth later stage company with multiple products and sales team.

And all we have here is additional assumptions for an expansion, MRR, and a contraction MRR, which had to do with selling additional services or an upgrade to an existing customer or seeing downgrades from existing customers respectively.

The numbers will all look the same.

So I'm just gonna pick the numbers up from before for the prime month number, the new MRR, the lost MRR coming from churn.

The expansion MRR applies to the prior month number as well.

So we can just take the 2.5% expansion upgrade of services and add that on.

And the contraction of 1.5%, multiply it by the prior month, MRR, and multiply by minus one.

So this would give us an ending MRR of 3,210.

And again to annualize it up to the ARR, we just multiply by 12.