Glossary — metrics
NRR (Net Revenue Retention)
Also known as: Net Revenue Retention · Net Dollar Retention · NDR
Net Revenue Retention measures the percentage of revenue retained from a cohort of customers over a year, including expansion and contraction but excluding new customers.
How it works
NRR = (Starting ARR + Expansion - Contraction - Churn) / Starting ARR. A best-in-class SaaS company has NRR above 120%, meaning each cohort of customers grows in spend by 20%+ per year on average. NRR above 100% means a company can grow without adding new customers — a massively valuable property that drives investor multiples.
Worked example
A company starts the year with $1M ARR from its existing customers. Over the year they upsell $300K, churn $100K, and downsell $50K. NRR = ($1M + $300K − $100K − $50K) / $1M = 115%.