Finance
NRR (Net Revenue Retention)
The percentage of recurring revenue retained from existing customers over a period, including upgrades, downgrades, and churn. Calculated annually for most SaaS reporting.
In plain English
If your $1M ARR cohort from last year is now $1.1M ARR (some upgraded, some churned), your NRR is 110%. Over 100% means existing customers, in aggregate, pay you more this year than last.
Example
Start of year ARR from existing customers: $2M. Of this group, churn removed $200k, downgrades removed $50k, upgrades added $400k. End-of-year ARR from this cohort: $2.15M. NRR = $2.15M / $2.00M = 107.5%.
Formula
NRR = (Starting ARR + Expansion − Downgrades − Churn) / Starting ARR Measured on a fixed cohort, typically year-over-year.
Why it matters
NRR is the single best long-term SaaS health metric. 110%+ means the customer base is a growth engine on its own — even without new logos, revenue grows. Below 100% means you're growing despite your customers, which doesn't scale.
Common mistakes
- Confusing NRR with GRR (Gross) — NRR includes expansion, GRR doesn't
- Calculating on monthly base — too noisy; annual cohort is standard
- Excluding usage-based revenue — leads to understated NRR for consumption-priced products
- Comparing your NRR to public-company peers without segment adjustment — enterprise NRR is naturally higher than SMB NRR