What is net revenue retention (NRR)?
Net revenue retention is recurring revenue now from customers you had a year ago, including expansion and losses, divided by their recurring revenue a year earlier. It is also called net dollar retention. NRR above 100 percent means the existing base grew on its own. Revenue from customers won during the year is left out.
Why it matters to a revenue leader
NRR is one of the numbers investors use to judge the quality of a SaaS business, because a base that grows by itself makes every new customer more valuable. For a revenue leader, it ties sales, customer success and account management to one number. In services, the same idea is growth of the agreement base: price increases, added sites and add-on services on existing agreements, net of non-renewals.
How to calculate it
NRR = (starting recurring revenue + expansion minus contraction minus churn) divided by starting recurring revenue, for the same group of customers. A common mistake is letting revenue from new customers slip into the numerator.
Example
Fictitious numbersA software company's customers from a year ago paid $5 million in ARR. Over the year they added $900,000 through upgrades, cut $200,000 through downgrades, and $300,000 left with canceled accounts. NRR is $5.4 million divided by $5 million, or 108 percent.
"Is our existing customer base growing on its own, and which part of the team owns that number?"
Sources
- Net Revenue Retention (NRR) Meaning (Corporate Finance Institute) checked 9 Oct 2026
- Gross Revenue Retention (GRR) (Corporate Finance Institute) checked 9 Oct 2026