Net Revenue Retention (NRR)

Net revenue retention measures how much recurring revenue is retained from existing customers over a specific period, after upgrades, downgrades, and churn. It is expressed as a percentage. Above 100% indicates revenue growth from the current base. Below 100% indicates decline.

NRR excludes revenue from new customers added during the period. Calculate it for monthly, quarterly, or annual windows and by market, cohort, or segment.

NRR formula

NRR = ((Beginning MRR − MRR lost to churn − MRR lost to downgrades + expansion revenue) ÷ Beginning MRR) × 100%

Example

Beginning MRR 100,000. Churn 5,000. Downgrades 2,000. Expansion 8,000. NRR = ((100,000 − 5,000 − 2,000 + 8,000) ÷ 100,000) × 100% = 101%.

NRR vs GRR

Gross revenue retention measures retention excluding expansion revenue. GRR cannot exceed 100%. NRR includes upsells, cross-sells, and add-ons, so it can exceed 100%.

Benchmarks

More than 100% indicates healthy retention and expansion. 80% to 100% indicates stable retention with limited expansion. Below 80% indicates material retention issues. Compare against your historical trend and peer benchmarks by segment.

Why NRR matters

Revenue stability and forecast quality for subscription businesses. Growth without new customer acquisition when NRR exceeds 100%. Cost efficiency when expansion outweighs churn relative to CAC. Customer value signal when upgrades outpace downgrades and churn. Investor signal due to tight correlation with valuation multiples.

How to improve NRR

Outcome‑driven onboarding to shorten time to value. Customer success motions that drive adoption and prevent risk. Clear expansion paths and packaging to grow Expansion Revenue. Pricing and discount discipline aligned to realized value. Proactive risk management using product usage and support signals. Feedback loops to fix downgrade and churn drivers. Segmentation and playbooks by account value and cohort.

Related

MRR Expansion Revenue Churn Rate LTV CAC