Net Revenue Retention (NRR)
The single number investors care most about — whether your existing customers grow on their own, even before a single new logo.
What is it?
Net Revenue Retention is the percentage of recurring revenue you keep from your existing customers over a period, counting expansion as well as churn and contraction. It answers the question investors care about most: left to itself, with no new customers at all, is your existing book growing or shrinking?
Because expansion is included, NRR can exceed 100% — and above 100% is the mark of a business that compounds on its own. Above 120% is exceptional, 100–120% is healthy, and below 100% means the base is shrinking. It is the most-quoted retention number in SaaS and, not coincidentally, the one most often calculated inconsistently, because every term in it hides an accounting decision.
How to calculate?
Take the MRR from a cohort of existing customers at the start of the period, add expansion and subtract contraction and churn, then divide by that starting MRR. Twenty thousand dollars of starting MRR that gains $3,000 in expansion and loses $800 to contraction and $1,200 to churn retains $23,000 — an NRR of 105%. New customers are deliberately excluded; this measures only the base you already had.
Read NRR beside GRR — the gap between the two is exactly how much expansion is masking underlying losses.
Decisions to be made
The number swings on definitions you must fix in advance — your answers materially change what you report.
- Does a monthly-to-annual upgrade count as expansion?
- Does a plan-tier downgrade count as contraction or churn?
- Does a paused subscription count against the current cohort or the next one?