Net Revenue Retention (NRR)
Percentage of recurring revenue retained from existing customers after accounting for churn, downsells, and expansions
What is Net Revenue Retention (NRR)?
Net revenue retention is the percentage of recurring revenue kept from existing customers over a period, including expansion. It shows whether the existing customer base is growing or shrinking in value.
A figure above 100% means existing customers are spending more than the amount lost to churn and downgrades, so the business grows even without new customers.
How this KPI is measured
- Function
- Customer Success & Service
- Sub-function
- Revenue Retention
- Industry
- All Industries
- Type
- Lagging
- Impact
- Revenue
- Unit
- %
- Measurement frequency
- Monthly / Quarterly
- Formula
- ((Starting MRR + Expansion MRR − Churned MRR − Contraction MRR) / Starting MRR) × 100
How to calculate it
Add expansion monthly recurring revenue (MRR) to starting MRR, subtract churned and contraction MRR, divide by starting MRR, and multiply by 100.
For example, with starting MRR of 1,000,000, expansion of 150,000, churn of 60,000 and contraction of 40,000, NRR is (1,000,000 + 150,000 - 60,000 - 40,000) / 1,000,000 x 100 = 105%.
Measure a fixed cohort of customers over a set period, usually 12 months, and exclude revenue from customers who joined during the period.
Where it is used
Judging customer base health
See growth from existing customers.
Guiding investment
Decide between retention and acquisition.
Reporting to boards and investors
A key subscription metric.
How to improve it
Tips and common mistakes
- Always view alongside gross revenue retention.
- A few large expansions can mask broad churn.
- Use the same period for every measurement.
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