Net Revenue Retention (NRR)

Net Revenue Retention (NRR, also called Net Dollar Retention or NDR) measures how much revenue you keep and grow from your existing customer base over a given period — typically a year. Unlike simple churn, NRR accounts for expansion revenue: upgrades, upsells, cross-sells, and seat additions from customers who stick around.

The formula: NRR = (starting MRR + expansion MRR - contraction MRR - churned MRR) / starting MRR × 100. If you started with $100K MRR from a cohort of customers, lost $5K to churn, lost $2K to downgrades, but gained $15K from upsells and expansions, your NRR = ($100K + $15K - $2K - $5K) / $100K = 108%.

An NRR above 100% means your existing customers are spending more over time than they're churning — this is the holy grail of SaaS. It means you could literally stop acquiring new customers and still grow. Top-tier SaaS companies (Snowflake, Twilio, Datadog) have reported NRR of 120-170%. An NRR below 100% means you're losing revenue from existing customers faster than you're expanding it, which creates a "leaky bucket" that gets harder to fill over time.

NRR is considered the single best indicator of product-market fit and long-term business health in SaaS. Investors obsess over this metric because it shows whether your existing customers are getting more value over time (expanding) or less (churning). NRR above 120% is elite. NRR of 100-120% is healthy. NRR below 100% means you have a retention problem. The metric also has a massive impact on growth efficiency — a company with 130% NRR needs far less new customer acquisition to grow than one with 90% NRR.