Net revenue retention (NRR)
Also known as: NRR
In short
Net revenue retention (NRR) is the percentage of recurring revenue you keep and grow from an existing group of customers over a period, after counting expansion, contraction, and churn. New customers are excluded.
An NRR above 100 percent means existing customers are paying more in total than they did before, even after cancellations. Below 100 percent, the existing base is shrinking and new sales must fill the gap.
How to calculate NRR
- Formula: NRR = (starting MRR + expansion - contraction - churn) / starting MRR, times 100.
- Example: Say a cohort paid 100,000 a month a year ago. Today those same customers pay 108,000 after 20,000 of upsell, 5,000 of downgrades, and 7,000 of churn. NRR is 108,000 / 100,000, or 108 percent.
- Cohort rule: Only include customers who existed at the start. Exclude revenue from anyone who joined later.
NRR vs. gross revenue retention
Gross revenue retention (GRR) ignores expansion and caps at 100 percent. It shows how much revenue you keep without upsell. NRR adds expansion on top, so it shows total growth from the base. Look at both: strong NRR can hide high churn if a few accounts expand a lot.
What drives NRR
- Expansion: Seat growth, upgrades, add-ons, and usage increases.
- Pricing and packaging: Models that scale with value make expansion natural.
- Customer success: Onboarding and adoption reduce churn and prepare accounts to grow.
- ICP fit: Customers that match your profile tend to stay and expand.
How GTM teams use NRR
- Prioritize expansion: A high NRR suggests selling more to existing accounts is efficient.
- Spot weak segments: Break NRR out by industry, size, and plan to see where revenue erodes.
- Evaluate growth quality: Growth from the existing base typically costs less than winning new logos.
Common mistakes
- Including new customers: This inflates the figure.
- Mixing periods: Compare like with like, usually trailing 12 months.
- Reading it alone: A single large expansion can mask widespread churn. Check GRR and logo retention too.
Net revenue retention FAQs
What is net revenue retention (NRR)?
Net revenue retention is the percentage of recurring revenue retained and grown from existing customers over a period. It includes upsell, downgrades, and churn, and excludes revenue from newly acquired customers.
How do you calculate NRR?
Take starting recurring revenue from a customer cohort, add expansion revenue, subtract contraction and churn, and divide by the starting revenue. Multiply by 100. Exclude any customers who joined after the starting point.
What does an NRR over 100 percent mean?
It means existing customers generate more recurring revenue than before, because expansion outweighs churn and downgrades. The installed base grows even with no new customers, which is generally a sign of strong retention and expansion.
What is the difference between NRR and GRR?
NRR includes expansion revenue, so it can exceed 100 percent. Gross revenue retention excludes expansion and counts only losses from churn and downgrades, so it cannot exceed 100 percent. GRR shows underlying retention, and NRR shows total growth from the base.
