Revenue that’s contracted / subscribed to continue in the future
Recurring revenue is booked at the rate that service is delivered. Only the part of the revenue that’s expected to continue also in the next month is included.
Booking revenue as it’s earned is a standard practice in accrual-basis accounting, but when we calculate MRR, we don’t do official ‘revenue recognition’ with its standardized rules, but something called ‘normalization’. We don’t call it ‘depreciation’, because depreciation also accounts for loss of value during time. We don’t call it ‘amortization’, because amortization is just depreciation for intangible assets – like stocks.