# Net revenue retention

> Net revenue retention (NRR) is the percentage of recurring revenue a company keeps from its existing customers over a period, usually 12 months, after adding expansion and subtracting downgrades and churn. Revenue from new customers is excluded. Above 100 percent means existing customers spend more over time than the company loses from cancellations and downgrades.

Source: https://delsivo.com/glossary/net-revenue-retention · Updated 2026-11-06

## Key takeaways

- NRR = (starting ARR + expansion minus contraction minus churn) divided by starting ARR.
- It measures existing customers only. New customers don't count.
- Gross revenue retention leaves out expansion and can't exceed 100 percent.

## Net revenue retention formula and example

Take the customers who were paying 12 months ago and their ARR then. Measure the same customers' ARR today. Divide today's figure by the starting figure.

| Item | Amount |
| --- | --- |
| ARR from the group 12 months ago | $1,000,000 |
| Expansion (upgrades, more seats) | +$200,000 |
| Contraction (downgrades) | minus $50,000 |
| Churn (cancellations) | minus $100,000 |
| Same customers' ARR today | $1,050,000 |
| Net revenue retention | 105% |

## Why investors ask about NRR

NRR shows whether customers get more value over time. A company with NRR above 100 percent grows even without new sales; one well below it has to replace lost revenue before it can grow. Investors usually want it by customer segment, because a few large expansions can hide churn among smaller customers.

## Checking an NRR claim

Ask for the period, the group of customers and whether it is a cohort or a blended figure. Recalculate it from a customer-level revenue export if you can. Early-stage companies often have too few customers or too short a history for NRR to mean much, so treat a single figure with care and record it as founder reported until checked.

## Common confusions

- NRR versus gross revenue retention (GRR): GRR excludes expansion.
- Revenue retention versus logo retention: losing many small customers can still leave NRR high.
- Net dollar retention (NDR) is another name for the same idea.

## Frequently asked questions

### What is a good net revenue retention?

It depends on the segment and stage. Above 100 percent means the existing base grows on its own; compare against companies selling to similar customers.

### Can NRR be calculated monthly?

Yes, but annual figures are more common because monthly figures are noisy, especially for annual contracts.

### Does NRR include new customers?

No. It covers only customers who were already paying at the start of the period.

## Related pages

- [ARR](https://delsivo.com/glossary/arr)
- [MRR](https://delsivo.com/glossary/mrr)
- [CAC payback](https://delsivo.com/glossary/cac-payback)
- [How to verify startup traction](https://delsivo.com/how-to-verify-startup-traction)