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    Glossary›NRR
    Glossary · Metric

    What is Net Revenue Retention (NRR)?

    Definition

    Net Revenue Retention (NRR) is a metric that measures the percentage of prior-year revenue retained and expanded from existing customers, typically expressed as a percentage greater than 100 percent. NRR includes revenue from customers who renewed, plus expansion revenue from existing customers (upgrades, add-ons, increased usage), minus revenue lost to churn. An NRR above 100 percent indicates expansion outpaces churn, a hallmark of healthy, mature SaaS companies.

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    MetricsRetentionExpansion RevenueSaaS HealthProfitabilityGrowth EfficiencyNRR
    In short

    NRR at a glance.

    Retention plus expansion from existing customers
    Expressed as percentage, healthy is 110%+
    Measures organic growth efficiency
    Indicates pricing power and customer success

    NRR as Leading Growth Indicator

    NRR above 120 percent is exceptional and signals a business that grows profitably even without acquiring new customers. NRR of 100-110 percent means new acquisition is critical for growth. NRR below 100 percent indicates churn is outpacing expansion—a red flag for business viability. Many investors track NRR as the single most important health metric because it predicts long-term profitability and growth potential.

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    NRR — frequently asked

    Take the cohort of customers from the start of last year, measure their total revenue at year start and year end, calculate revenue at year-end divided by revenue at year-start times 100 percent. If 10 customers generated 100,000 dollars at year start, but you kept all 10, lost 1 (20,000 dollars), and expanded remaining 9 by 10,000 dollars, NRR is (100,000 minus 20,000 plus 10,000) divided by 100,000 times 100 equals 90 percent (unhealthy).

    New customer growth is dependent on marketing and sales efficiency—factors outside your control (market size, competition, budgets). NRR is dependent on product value and customer success—factors you control. A business with 80 percent NRR and modest growth will eventually stall, while 120 percent NRR with slow acquisition still compounds to strong growth.

    Reduce churn through better onboarding and ongoing value communication, increase expansion by understanding customer use cases and upselling adjacent features, and improve product stickiness so users depend on the tool. For learning platforms, expansion often comes from adding more courses, users, or integrations to existing enterprise accounts.

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