Net Revenue Retention (NRR)

Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), measures the change in recurring revenue from a cohort of existing customers over a period, factoring in upgrades, downgrades, and cancellations. NRR above 100% means the existing customer base is growing without any new customer acquisition.

How it works

NRR is calculated by taking MRR from a cohort of customers at the start of a period, adding expansion MRR, subtracting contraction MRR, subtracting churned MRR, and dividing by the starting MRR. An NRR of 120% means that, on average, existing customers are spending 20% more than they were 12 months ago.

Key facts

• 100% threshold: NRR above 100% enables growth even with zero new customer acquisition
• Best-in-class benchmark: Top-performing enterprise SaaS companies maintain NRR of 120-140%
• Gross vs. net retention: Gross retention excludes expansion; NRR includes it for a complete picture

For builders

NRR is arguably the single most important SaaS metric because it captures product stickiness and expansion potential simultaneously. High NRR compounds: a 120% NRR business doubles existing customer revenue in roughly 4 years without acquiring a single new customer.

Sources

• Bessemer Venture Partners. State of the Cloud annual report. bvp.com
• SaaStr. SaaS benchmarks and metrics archive. saastr.com
• Bain & Company. The Net Promoter System. bain.com
• KPMG. Private SaaS Company Survey. kpmg.com
• ChartMogul. SaaS metrics benchmarks and definitions. chartmogul.com