Glossary
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Net Revenue Retention (NRR)

Net Revenue Retention (NRR)

A common formula is starting recurring revenue plus expansion, minus contraction and churn, divided by starting recurring revenue. NRR above 100% means expansion from retained customers more than offsets losses. Teams should define the period, revenue type, currency treatment, and customer population consistently. NRR can hide very different combinations of expansion and churn, so its components should also be reviewed.

What is Net Revenue Retention (NRR)?

Net Revenue Retention (NRR) measures how recurring revenue from an existing customer base changes after expansion, contraction, and churn, excluding revenue from new customers.

Why it matters

A common formula is starting recurring revenue plus expansion, minus contraction and churn, divided by starting recurring revenue. NRR above 100% means expansion from retained customers more than offsets losses. Teams should define the period, revenue type, currency treatment, and customer population consistently. NRR can hide very different combinations of expansion and churn, so its components should also be reviewed.

Example

A cohort starts the year with $1 million in recurring revenue, adds $150,000 in expansion, loses $50,000 to downgrades, and $40,000 to churn. NRR is 106%.

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