What is Net Revenue Retention?
Definition
A metric measuring the percentage of recurring revenue retained from existing customers, including expansions, contractions, and churn.
Understanding Net Revenue Retention
Net Revenue Retention (NRR) is considered the gold standard metric for subscription businesses because it shows whether existing customers are spending more or less over time. NRR above 100% means expansion revenue (upgrades) exceeds lost revenue (downgrades and cancellations). Top SaaS companies like Snowflake and Twilio have achieved NRR above 130%, meaning they grow significantly even without acquiring new customers.
For consumers, companies with high NRR tend to have products that naturally grow with your needs, which may mean increasing costs over time.
Related Terms
MRR
Monthly Recurring Revenue — the predictable total revenue a subscription business expects to earn each month from all active subscriptions.
Churn Rate
The percentage of subscribers who cancel their subscription during a given time period, typically measured monthly or annually.
Retention Rate
The percentage of subscribers who continue their subscription over a given period, calculated as the inverse of churn rate.
Expansion Revenue
Additional revenue generated from existing subscribers through upgrades, add-ons, or increased usage beyond their initial plan.