The ultimate metric for measuring product stickiness and expansion revenue
Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), measures the revenue retained from existing customers over time, including expansions, downgrades, and churn.
It's arguably the most important SaaS metric because it shows whether you're growing revenue from your existing customer base without adding any new customers.
NRR = (Starting MRR + Expansion - Contraction - Churn) ÷ Starting MRR × 100%
Example: ($100K + $15K - $3K - $7K) ÷ $100K = 105% NRR
This cohort started at $100K and grew to $105K without any new customers!
Revenue from a cohort of customers at the beginning of the period (excludes new customers)
Upsells, cross-sells, more seats, higher tiers from existing customers
Downgrades, removed seats, tier changes to lower plans
Customers who cancelled completely
Top-tier SaaS companies. Expansion more than offsets all churn.
Strong product-market fit with good expansion motion.
Healthy retention with some expansion revenue.
Losing revenue from existing customers. Investigate retention.
When NRR exceeds 100%, your existing customers are growing their spending faster than you're losing revenue to churn and contraction. This means:
Some of the best public SaaS companies and their NRR:
Key Insight: NRR is the ultimate proof of product value. If customers consistently spend more over time, you're solving a real, growing problem. Companies with high NRR can sustain growth even during tough times when new customer acquisition is expensive.
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