Framework
Term

NRR (Net Revenue Retention)

The percentage of recurring revenue retained from existing customers over a period, including expansion and contraction but excluding new acquisitions. NRR above 100% means existing customers grew your revenue net of churn.

Net Revenue Retention (NRR) — also called Net Dollar Retention (NDR) — measures how the revenue from a cohort of existing customers changes over a period. The formula:

NRR = (Starting ARR + Expansion − Contraction − Churn) / Starting ARR

A 100% NRR means the cohort generates the same revenue at period end as at the start. Above 100% means expansion outpaced contraction and churn. Below 100% means the cohort is leaking.

What NRR includes and excludes

Includes, for the cohort active at period start:

  • Expansion: upgrades, seat additions, usage-based growth on existing contracts
  • Contraction: downgrades, seat reductions
  • Churn: full cancellations

Excludes:

  • New customers acquired during the period — those are New ARR, tracked separately

The exclusion is what makes NRR a clean measure of the existing-customer dynamics, isolated from sales-led acquisition.

Best-in-class benchmarks

  • Mid-market SaaS: ~110% NRR is healthy; ~120%+ is excellent
  • Enterprise SaaS: ~120% NRR is healthy; ~130%+ is best-in-class (Snowflake, Datadog historically reported ~150%+)
  • SMB SaaS: ~100% NRR is healthy because of higher churn structurally; ~110%+ is excellent

NRR above 100% means a company is growing on autopilot from its existing book — even with zero new customers acquired, revenue still grows. This is the metric VCs and public markets watch most closely for SaaS valuation.

Related

See also

Nearby terms

All terms →
North Star Metric

The single metric that best captures the core value a product delivers to its customers — the one number every team can rally around.

NPS (Net Promoter Score)

A single-question customer loyalty metric calculated as %Promoters (9–10) minus %Detractors (0–6). NPS ranges from −100 to +100. Above 30 is good, above 50 is excellent, above 70 is best-in-class.

OKRs (Objectives and Key Results)

A goal-setting framework where each Objective is a qualitative, ambitious statement of intent and 3–5 Key Results are the quantitative measures of achievement. Developed by Andy Grove at Intel; brought to Google in 1999.

Positioning

The deliberate choice of how a product is described, framed, and compared so a defined customer immediately understands why they should choose it over alternatives. Positioning is the bridge between segmentation and messaging.