Net revenue retention (NRR), also known as Net dollar retention (NDR), is a metric that shows how much recurring revenue you retain from existing customers over a period of time, factoring in upgrades, downgrades, and churn.

High NRR indicates strong product-market fit, customer satisfaction, and growth efficiency. It’s often a top metric investors look at when evaluating SaaS companies.

Formula:

NRR = ((Starting MRR + Expansion – Contraction – Churn) ÷ Starting MRR) × 100

• Expansion = upsells, cross-sells, add-ons
• Contraction = downgrades
• Churn = lost accounts or cancellations

Example:

You start the month with $100,000 MRR from existing customers.

• $10,000 comes from upsells
• $3,000 downgrades
• $7,000 churns

NRR = ((100K + 10K – 3K – 7K) ÷ 100K) × 100 = 100%

An NRR of 100% means your expansion revenue offsets any losses. Above 100% means there is revenue growth from existing accounts, whereas below 100% indicates revenue shrinkage despite retention.