Net Revenue Retention (NRR / NDR)
Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), measures the percentage of recurring revenue retained from existing customers over a period, including expansions and excluding new customers.
Formula
In depth
NRR above 100% means your existing customer base is growing on its own — without acquiring new customers. This is the SaaS holy grail: negative churn.
Components: - Starting MRR from existing cohort + Expansion MRR (upgrades, additional seats, add-ons) - Contraction MRR (downgrades) - Churned MRR (cancellations) = Ending MRR
NRR = Ending MRR ÷ Starting MRR × 100
Benchmarks: - <80%: severe churn problem, business is shrinking - 80–100%: retention issues, growth requires constant new acquisition - 100%+: healthy — base grows without new acquisition - 110%+: good — Salesforce-level retention - 120%+: world-class — Snowflake, Datadog territory
Why VCs care: at 120% NRR, a $1M ARR cohort becomes $1.44M in 2 years, $1.73M in 3 years — without a single new customer. This creates exponentially compounding growth.
Real example
Starting MRR from existing customers: $100K. Expansion: +$15K. Contraction: -$5K. Churn: -$8K. Ending MRR: $102K. NRR = $102K ÷ $100K × 100 = 102%. Good, but room to improve expansion.
Related terms
MRR (Monthly Recurring Revenue)
Monthly Recurring Revenue (MRR) is the predictable, normalized monthly revenue generated from all active subscriptions. It's the north star metric for SaaS companies.
ARR (Annual Recurring Revenue)
Annual Recurring Revenue (ARR) is the yearly equivalent of your recurring subscription revenue. It's MRR × 12 and is the primary metric investors use to value SaaS companies.
LTV (Lifetime Value)
Customer Lifetime Value (LTV or CLV) is the total predicted revenue you'll earn from a customer over the entire duration of your relationship.
Churn Rate
Churn rate is the percentage of customers (or revenue) that cancels or doesn't renew in a given time period. It's the single most important retention metric for subscription businesses.
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