Net Revenue Retention (NRR)
Revenue from existing customers this period against the same cohort a year ago, including expansion, contraction and churn — but no new customers.
NRR takes a cohort of customers, looks at what they paid a year ago, and compares it to what the same cohort pays now — after upgrades, downgrades and cancellations. Above 100% means the existing base grew without a single new customer, which is the strongest signal a subscription business can produce, and the reason it is the first number most investors ask for.
It is a compounding measure, and that cuts both ways. At 120%, revenue grows by a fifth annually with acquisition switched off. At 85%, the company must replace 15% of revenue every year before growing at all, which makes every acquisition improvement a treadmill rather than a gain. Because it excludes new customers entirely, NRR is the metric that exposes what a strong acquisition quarter can otherwise hide.
In practice
A company with 40% year-on-year growth reported NRR of 91%. Existing customers were shrinking; growth came wholly from new logos acquired at rising cost. Shifting roadmap effort from acquisition features to the two causes of downgrades moved NRR to 104% over three quarters, and headline growth became sustainable rather than purchased.
Where teams get it wrong
- Including new customers, which turns it into a growth figure and removes the point.
- Reporting it without gross retention beside it, so heavy churn masked by a few large expansions is invisible.
- Computing it on logos rather than revenue.
- Comparing across companies without checking cohort definitions.
- Reading a high NRR from a handful of expanding accounts as broad health.
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Related terms
All terms- Annual Recurring Revenue (ARR)The value of contracted subscription revenue normalised to a year — recurring only, excluding one-off fees.
- ChurnThe rate at which customers stop paying or stop using a product over a given period — the mirror image of retention.
- RetentionThe share of users who keep using a product over time — the single best indicator of whether it delivers real, repeated value.
- Lifetime Value (LTV)The total gross profit a customer is expected to generate before they leave — the ceiling on what acquiring them can be worth.