Net Revenue Retention (NRR)

Net revenue retention answers whether an existing recurring-revenue customer base is growing or shrinking without counting new business. Select the customers active at the start of a period. Take their beginning recurring revenue, add expansion from those customers, subtract contraction and lost recurring revenue from churn, then divide by beginning recurring revenue and multiply by 100.

For example, a maintenance subscription business starts with $20,000 in monthly recurring revenue. Existing customers add $2,000 in upgrades, reduce plans by $500 and cancel $1,000. NRR is ($20,000 + $2,000 - $500 - $1,000) / $20,000, or 102.5%. That does not mean 102.5% of customers stayed; revenue and customer counts measure different things.

NRR is most useful for subscriptions, retainers and other reliably recurring contracts. It is usually inappropriate to mix one-off repair invoices into an MRR calculation without an explicit business-specific definition. Gross revenue retention excludes expansions; customer retention counts customers instead of dollars. A strong NRR can also hide substantial cancellation if a few surviving accounts expand dramatically.