---
title: "What Is Net Revenue Retention (NRR)?"
term: "Net Revenue Retention (NRR)"
description: "Net revenue retention (NRR) measures how much recurring revenue from an existing customer cohort changes over a period — including expansion, contraction, and churn — expressed as a percentage of starting ARR."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/net-revenue-retention-nrr
---

# What Is Net Revenue Retention (NRR)?

> Net revenue retention (NRR) measures how much recurring revenue from an existing customer cohort changes over a period — including expansion, contraction, and churn — expressed as a percentage of starting ARR.

**Net revenue retention (NRR)** — also called net dollar retention — tracks whether revenue from existing customers grows or shrinks over time, usually on a trailing twelve-month basis.

### How it works

Cohort method: ARR from customers active twelve months ago was $10M. Today those same accounts collectively pay $11.2M after churn and expansion → NRR = 112%. New customers signed in the last year are excluded from this calculation.

Components: **expansion** (upsells, seat growth), **contraction** (downgrades), and **churn** (lost logos). NRR above 100% implies negative churn on dollars. Logo retention can still be lower if small accounts churn while large ones expand.

Reporting varies: some companies include price increases, usage-based overages, or professional services tied to subscriptions. Investors ask for definitions and a bridge from starting to ending ARR so NRR can be reconciled to CRM and billing data.

### Why it matters

- **Founders:** NRR guides where to invest — customer success, product attach, pricing — versus pure new-logo sales. Weak NRR eventually caps growth no matter how much you spend on marketing.
- **Investors:** Best-in-class B2B SaaS often targets NRR above 110–120% at scale. Due diligence uses NRR with CAC payback and gross margin to assess efficient growth.

### Common mistake

Blending new customer ARR into NRR. That inflates the metric and hides churn problems in the installed base.

### Related ideas

See also [negative churn](/glossary/negative-churn), [NRR bridge](/glossary/nrr-bridge), gross revenue retention, and logo retention.

## FAQ

### What is Net Revenue Retention (NRR) in simple terms?

Take the recurring revenue from customers you had twelve months ago, then measure what those same customers pay today after upsells, downsells, and cancellations. Divide by the starting amount. Above 100% means expansion beat losses.

### Why does Net Revenue Retention (NRR) matter?

High NRR means the installed base compounds without proportional new sales spend. Investors use it to judge SaaS efficiency, pricing power, and whether growth is durable or bought mainly through new logo acquisition.


---
Source: https://venturecapitaltracker.com/glossary/net-revenue-retention-nrr