Growth & SaaS
Net revenue retention (NRR)
Net revenue retention is the share of recurring revenue from existing customers that a business keeps over a period, after upgrades, downgrades and cancellations.
NRR = (Starting MRR + Expansion − Contraction − Churned MRR) ÷ Starting MRR
Worked example
| MRR from existing customers a year ago | $100,000 |
| Expansion from upgrades | $18,000 |
| Contraction from downgrades | $4,000 |
| MRR lost to cancellations | $6,000 |
($100,000 + $18,000 − $4,000 − $6,000) ÷ $100,000 = 108%
Why it matters
NRR above 100% means the existing customer base grows on its own, before a single new sale. It is one of the clearest signs that customers value the product.
Common mistakes
Where it misleads
Including revenue from new customers won during the period, which belongs in growth, not retention.
Mixing periods: a monthly NRR and a 12-month NRR are not comparable.
Letting a few large expansions hide a steady rise in cancellations underneath.
Related terms
Keep reading
- Monthly recurring revenue (MRR)Monthly recurring revenue is the predictable subscription revenue a business expects to bill every month, normalized to a monthly amount.
- Customer churn rateCustomer churn rate is the share of customers at the start of a period who cancel or stop paying during it.
- Customer lifetime value (LTV)Customer lifetime value is the gross profit a business expects to earn from an average customer over the whole time they stay.
Stop calculating it by hand.
Dear CFO keeps your statements, forecasts and metrics current from the systems you already run.