NRR
Also: NRR, Net Revenue Retention, Net Dollar Retention, NDR, Taux de retention net du revenu, Retention nette du revenu
Net Revenue Retention measures the percentage of recurring revenue retained and grown from existing customers over a period, including upsell and expansion, net of downgrades and churn.
What it is
Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), is the percentage of recurring revenue retained from an existing set of customers over a period (usually 12 months), after accounting for expansion (upsell and cross-sell), contraction (downgrades), and churn (cancellations). Crucially, it excludes revenue from new customers acquired during the period.
The standard formula is:
NRR = (Starting MRR + Expansion, Contraction, Churn) / Starting MRR
An NRR above 100% means the existing base is growing on its own, even before any new sales. Below 100% means the base is shrinking.
Why it matters
- Growth efficiency: High NRR compounds. A company with 120% NRR doubles revenue from its existing base in roughly four years without adding a single new customer.
- Predictability: Recurring, retained revenue is the most reliable base for forecasting and valuation.
- Valuation signal: Investors treat NRR as a leading indicator of product-market fit and pricing power. SaaS benchmarks often cite 100% to 110% as solid and above 120% as best in class.
- Capital efficiency: Expanding existing accounts is usually far cheaper than acquiring new ones.
How it is used in practice
- Segmentation: Track NRR by cohort, plan tier, industry, and region to find where expansion or churn concentrates.
- Cadence: Measured monthly, quarterly, and on a trailing twelve month basis to smooth noise.
- Gross vs net: Compare with Gross Revenue Retention (GRR), which ignores expansion and caps at 100%. A large gap between NRR and GRR means expansion is masking real churn.
- Alignment: Ties customer success, product, and pricing to a single accountable number.
Worked example
Start of year: 200 customers generating $1,000,000 in ARR.
During the year:
- Upsell and expansion: +$250,000
- Downgrades (contraction): -$50,000
- Cancellations (churn): -$100,000
NRR = (1,000,000 + 250,000, 50,000, 100,000) / 1,000,000 = 1,100,000 / 1,000,000 = 110%.
Interpretation: the existing base grew 10% on its own. New logos add on top of this. If GRR here is (1,000,000, 50,000, 100,000) / 1,000,000 = 85%, the gap shows expansion is offsetting meaningful churn that still needs fixing.
See also
Frequently asked questions
What does NRR (Net Revenue Retention) actually measure?
Net Revenue Retention measures the share of recurring revenue kept from an existing customer base over a period, usually twelve months, after expansion (upsell and cross-sell), contraction (downgrades) and churn. It deliberately excludes revenue from customers acquired during the period, so it isolates how the existing base behaves on its own. The formula is (Starting MRR + expansion - contraction - churn) / Starting MRR.
Is NRR the same thing as NDR or Net Dollar Retention?
Yes. Net Revenue Retention (NRR), Net Dollar Retention (NDR) and net revenue retention rate are the same metric under different names, with NDR more common in US SaaS reporting. Check the calculation details before comparing companies: the period used, whether it runs on MRR or ARR, and how mid-period upgrades are treated all shift the number.
What is a good NRR level?
SaaS benchmarks commonly place 100% to 110% as solid and above 120% as best in class. Above 100%, the existing base grows on its own before any new sale; below 100%, it shrinks and new customers have to fill the hole. At 120% NRR, revenue from the existing base roughly doubles in about four years without a single new customer.
What is the difference between NRR and Gross Revenue Retention (GRR)?
GRR ignores expansion and is therefore capped at 100%: it only counts contraction and churn. NRR includes upsell and cross-sell, so it can exceed 100%. Reading both together is what matters: a wide gap means expansion inside a few accounts is masking churn that is still there.
How do you calculate NRR on a concrete case?
Take 200 customers generating $1,000,000 in ARR at the start of the year, then +$250,000 of upsell and expansion, -$50,000 of downgrades and -$100,000 of cancellations. NRR = 1,100,000 / 1,000,000 = 110%, so the existing base grew 10% on its own and new logos add on top. GRR on the same case is 850,000 / 1,000,000 = 85%, and that 25 point gap shows expansion is offsetting churn that still needs fixing.