NRR = (Starting MRR + Expansion − Contraction − Churn) / Starting MRR

It measures how much revenue you retain and grow from an existing cohort over a period (usually 12 months), ignoring new customer acquisition. You pick a cohort by the MRR they had at period start, then track only those same customers at period end.

Starting MRR: recurring revenue from the cohort at t=0.
Expansion: upsells, upgrades, seat adds from that cohort during the period.
Contraction: downgrades, seat reductions from that cohort.
Churn: cancellations from that cohort.

NRR > 100% means the expansion from existing customers outweighs contraction + churn combined. You’re growing the base organically even if you signed zero new customers.

~100%: stable, no net loss, no net growth from existing base.
>110%: healthy, often considered “best-in-class SaaS.” Snowflake, Datadog, and others have posted >125% at peak.
<90%: leaky bucket. You’re acquiring just to stand still, and CAC efficiency is going to suffer.

Why investors watch it: NRR is a leading indicator of durable growth. A company with NRR > 100% can slow acquisition spend without revenue falling. It’s also the single metric most correlated with SaaS valuations at late stage.

Traps to call out:

Cohort arithmetic matters. Mixing new signups into starting MRR inflates the number.
Logo churn ≠ revenue churn. A single whale leaving can tank NRR even with low logo churn.
Seasonality. Seat-based SaaS with annual renewals can show misleading monthly NRR.

What is Net Revenue Retention, and when does it exceed 100%?

Draft your answer

Stuck? Peek at a hint

More product metrics questions