An MRR bridge (or MRR waterfall) shows exactly how MRR moved from one month to the next by decomposing it into five buckets: new MRR from new customers, expansion MRR from upgrades, contraction MRR from downgrades, churned MRR from cancellations, and reactivation MRR from returning customers.

Example: Starting with $500,000 MRR: +$40,000 new, +$25,000 expansion, -$8,000 contraction, -$18,000 churn, +$3,000 reactivation = ending MRR of $542,000. The MRR bridge explains every dollar of movement.