Net Revenue Retention (NRR) measures how much recurring revenue a company retains from its existing customers over a specific period, factoring in expansions, contractions, and churn.
You can calculate NRR by comparing the starting revenue from existing customers with the revenue from those same customers at the end of the period, after accounting for expansion, contraction, and churn.
Identify Starting MRR/ARR from existing customers at the beginning of the period.
Add Expansion Revenue (upsells, cross-sells, and upgrades from those customers).
Subtract Contraction Revenue (downgrades or reduced usage).
Subtract Churned Revenue.
Divide by Starting Revenue to see how much is retained.
Multiply by 100 to express as a percentage.
NRR (%) = (Starting Revenue + Expansion – Contraction – Churn) ÷ Starting Revenue ×100
110% or above NRR indicates that the company is doing excellent in expanding revenue from existing customers.
NRR includes expansions, GRR does not. NRR can exceed 100%, GRR cannot.
Because recurring revenue growth depends heavily on keeping and expanding existing customers, often cheaper than acquiring new ones.
Yes, if expansion revenue outweighs churn and contraction. Many top SaaS companies aim for 120%+.