Skip to content
Log in
← Statistics glossary

NRR (net revenue retention)

Also called: net revenue retention, net dollar retention, NDR, net retention

The share of recurring revenue from existing customers that is still there after a period, counting expansion and subtracting downgrades and churn: (starting MRR + expansion − contraction − churned MRR) ÷ starting MRR. Above 100% means existing customers grow revenue on their own.

NRR (net revenue retention) measures how much of the recurring revenue you had from a group of customers at the start of a period you still get from the same customers at the end, including any growth. The formula: NRR = (starting MRR + expansion − contraction − churned MRR) ÷ starting MRR. New customers are left out entirely.

NRR combines retention and expansion in one number. Below 100%, the existing base shrinks and new sales must first fill the hole; at 100%, the base holds steady; above 100%, existing customers grow revenue by themselves, which is the same thing as negative churn. It's usually quoted per year, and it's one of the numbers buyers and investors look at first, because it shows whether revenue compounds or leaks.

A monthly NRR can be turned into a rough yearly one by raising it to the 12th power, which shows how quickly small monthly leaks add up. For a product with one flat price per customer, NRR can't go much above 100%, because customers have no way to pay more; price increases on existing customers and a value metric that grows with them are what lift it.

Example

GarageDesk starts October of year 1 with an MRR of 34,000 UAH and loses 1,800 UAH to three departing shops; nobody pays more. Monthly NRR = (34,000 − 1,800) / 34,000 = 32,200 / 34,000 ≈ 94.7%. Kept for a year, that would be about 0.947¹² ≈ 52%: only half of today's revenue base would remain.

In January of year 3 about 60 legacy shops move from 600 to 750 UAH, adding 60 × 150 = 9,000 UAH. Suppose churn that month takes 6,600 UAH (about 4% of 165,000). NRR = (165,000 − 6,600 + 9,000) / 165,000 = 167,400 / 165,000 ≈ 101.5%: existing customers alone grew revenue.

Common mistakes

  • Including new customers. NRR is only about customers who were already paying at the start.
  • Mixing monthly and yearly NRR. Say which one you quote; buyers usually expect yearly.
  • Hiding churn behind expansion. Report gross revenue retention next to NRR.
  • Expecting high NRR with a flat price. Without a way to pay more, customers can't expand.