Net Revenue Retention (NRR)
The percentage of recurring revenue retained from an existing customer cohort over a period, including expansion, contraction, and churn — excluding new customer revenue.
“Is our existing customer base growing or shrinking in revenue terms, independent of new sales?”
Whether the existing customer base is a net-growth or net-shrinking engine on its own, independent of new logo acquisition.
New customer acquisition performance — a strong NRR can mask a weak new-business motion, and vice versa.
Numerator
Starting Revenue + Expansion − Contraction − Churn
Denominator
Starting Revenue (from the same cohort, one year prior)
Example
$10M starting ARR + $1.5M expansion − $0.4M contraction − $0.6M churn = $10.5M. NRR = $10.5M / $10M = 105%.
Recommended visualization: Waterfall chart: starting ARR → expansion → contraction → churn → ending ARR
Always compute on a fixed cohort basis (same set of customers over the trailing 12 months) — including new logos in the denominator turns this into a different metric (gross revenue growth).
- Confirm expansion/contraction/churn dollar amounts reconcile to total ARR movement in finance systems
- Verify the cohort definition excludes any new customers acquired during the period
- Including new-logo revenue in the calculation, which is actually a different metric (total revenue growth, not NRR)
- Reporting NRR without capping it, when a single massive expansion deal is distorting the average for a small customer base
Get a conversational, stakeholder-friendly explanation of this KPI, generated on demand.