Net Revenue Retention (NRR)
ネット・レベニュー・リテンション
Net Revenue Retention (NRR) measures how much recurring revenue is retained from an existing customer cohort after expansion, contraction, and churn. It answers whether the installed base grows or shrinks before new-customer revenue.
What it means
NRR compares recurring revenue from the same starting customer cohort at the beginning and end of a measurement window. It includes expansion and upgrades, subtracts contraction and churn, and excludes revenue from newly acquired customers. SaaS and recurring-revenue teams use NRR to judge customer value growth, retention quality, pricing power, and the durability of the revenue base.
How to calculate it
Use a fixed cohort and a fixed recurring revenue basis. ARR, MRR, ACV, or another recurring measure can be used only if it is defined consistently. NRR = (starting MRR + expansion MRR - contraction MRR - churn MRR) / starting MRR | Use ARR or another recurring basis only when it is defined consistently | Measures existing-customer revenue movement Cohort rule | Use customers active at the start of the lookback period | Prevents new logos from inflating retention Window | Commonly 12 months, but must match the business cadence | Makes trend comparisons valid
| Lens | Formula / treatment | When to use it |
|---|---|---|
| NRR = (starting MRR + expansion MRR - contraction MRR - churn MRR) / starting MRR | Use ARR or another recurring basis only when it is defined consistently | Measures existing-customer revenue movement |
| Cohort rule | Use customers active at the start of the lookback period | Prevents new logos from inflating retention |
| Window | Commonly 12 months, but must match the business cadence | Makes trend comparisons valid |
What counts / what does not
NRR is only interpretable when the cohort, recurring revenue basis, and event treatment are explicit. Include | Expansion, upsell, cross-sell, price increases, contraction, downgrades, and lost recurring revenue from the starting cohort | Captures installed-base movement Exclude | New-customer revenue, non-recurring services, one-time usage outside the defined basis, and customers not in the starting cohort | Keeps NRR from becoming growth rate Disclose | ARR/MRR/ACV basis, lookback period, cohort rule, acquisition treatment, currency, and whether usage or asset-value changes are included | Prevents cross-company mismatch
| Item | Treatment | Why it matters |
|---|---|---|
| Include | Expansion, upsell, cross-sell, price increases, contraction, downgrades, and lost recurring revenue from the starting cohort | Captures installed-base movement |
| Exclude | New-customer revenue, non-recurring services, one-time usage outside the defined basis, and customers not in the starting cohort | Keeps NRR from becoming growth rate |
| Disclose | ARR/MRR/ACV basis, lookback period, cohort rule, acquisition treatment, currency, and whether usage or asset-value changes are included | Prevents cross-company mismatch |
What moves the number
NRR moves with expansion, contraction, churn, pricing, product adoption, customer health, and the quality of the original cohort. Expansion | Seat growth, usage growth, add-ons, and cross-sell push NRR above 100% Contraction | Downgrades, lower usage, and partial cancellations reduce NRR Churn | Lost customers remove recurring revenue from the starting cohort Pricing and packaging | Price increases and plan design can improve or distort NRR
| Driver | Metric impact |
|---|---|
| Expansion | Seat growth, usage growth, add-ons, and cross-sell push NRR above 100% |
| Contraction | Downgrades, lower usage, and partial cancellations reduce NRR |
| Churn | Lost customers remove recurring revenue from the starting cohort |
| Pricing and packaging | Price increases and plan design can improve or distort NRR |
When it helps
Shows whether existing customers can compound revenue without relying only on new acquisition. Guides customer success, product adoption, pricing, packaging, and expansion-sales priorities. Separates retention quality from new-logo growth in board, investor, and operating reviews.
- Shows whether existing customers can compound revenue without relying only on new acquisition.
- Guides customer success, product adoption, pricing, packaging, and expansion-sales priorities.
- Separates retention quality from new-logo growth in board, investor, and operating reviews.
How to use it
- NRR above 100% means expansion exceeded contraction and churn within the starting cohort.
- NRR below 100% means the existing cohort shrank before new-customer revenue.
- NRR is not the same as GRR, logo retention, or total revenue growth.
- Use cohort-level and segment-level NRR to find where product-market fit is strengthening or weakening.
Decision cautions
NRR can be overstated if the cohort, revenue basis, or expansion definition is loose. New-customer revenue must not be included in the numerator. Asset-value, usage, or pricing effects can make NRR hard to compare across companies. High NRR can hide weak new-logo acquisition; low NRR can be masked by strong new sales.
- New-customer revenue must not be included in the numerator.
- Asset-value, usage, or pricing effects can make NRR hard to compare across companies.
- High NRR can hide weak new-logo acquisition; low NRR can be masked by strong new sales.
Read with
Read NRR with retention and growth metrics that explain the cohort movement. GRR | Retained recurring revenue before expansion | Shows pure downside protection Logo Retention | Customers retained, regardless of revenue | Shows customer-count retention ARR/MRR | Recurring revenue base | Defines the revenue basis Expansion Revenue | Upsell, cross-sell, usage, or price expansion | Explains NRR above GRR
| Metric | Role | Why read together |
|---|---|---|
| GRR | Retained recurring revenue before expansion | Shows pure downside protection |
| Logo Retention | Customers retained, regardless of revenue | Shows customer-count retention |
| ARR/MRR | Recurring revenue base | Defines the revenue basis |
| Expansion Revenue | Upsell, cross-sell, usage, or price expansion | Explains NRR above GRR |
Example
A cohort starts the year with $10.0m ARR. During the year, those same customers add $1.8m expansion, reduce $0.7m through downgrades, and churn $0.6m. Ending cohort ARR is $10.5m, so NRR is 105%. New customers added $3.0m ARR, but that new ARR is excluded from NRR and belongs in total ARR growth analysis.
Compare with
NRR | Existing cohort after expansion, contraction, and churn | Installed-base compounding GRR | Existing cohort after contraction and churn, before expansion | Retention floor Churn Rate | Lost customers or revenue | Downside movement Revenue Growth | Total revenue change including new customers | Company-wide growth
| Metric | Difference | Why read together |
|---|---|---|
| NRR | Existing cohort after expansion, contraction, and churn | Installed-base compounding |
| GRR | Existing cohort after contraction and churn, before expansion | Retention floor |
| Churn Rate | Lost customers or revenue | Downside movement |
| Revenue Growth | Total revenue change including new customers | Company-wide growth |
Common mistakes
- NRR is total growth. It excludes new-customer revenue and focuses on an existing cohort.
- NRR above 100% means no churn. Expansion can offset churn, so inspect GRR and logo retention too.
- NRR is standardized across all companies. Definitions vary, especially around ACV, ARR, usage, and acquisitions.
Frequently asked questions
Can NRR exceed 100%?
Yes. NRR exceeds 100% when expansion from the starting cohort is larger than contraction and churn.
Does NRR include new customers?
No. NRR should use the starting cohort and exclude new customers acquired after the cohort start.
Why compare NRR with GRR?
GRR shows the retained base before expansion. NRR can look strong because expansion offsets churn, so GRR reveals downside retention quality.