How to calculate net revenue retention
Net revenue retention measures how much recurring revenue you keep and grow from your existing customers, excluding new sales. It is one of the most predictive metrics for durable growth, because a base that expands faster than it churns compounds powerfully.
Short answer
Calculate net revenue retention (NRR) by taking the starting recurring revenue from a cohort, adding expansion, subtracting contraction and churn, then dividing by the starting revenue and multiplying by 100. New-customer revenue is excluded. Above 100 percent means your existing base grows on its own; 110 percent or more is excellent.
Step by step
Define the cohort and window
Pick the customers who existed at the start of the period and their starting recurring revenue. NRR is always measured on an existing cohort, never on new customers.
Add expansion, subtract contraction and churn
Take starting revenue, add upsell and cross-sell, subtract downgrades and cancellations from that same cohort.
- NRR = (starting + expansion - contraction - churn) / starting x 100
- Exclude revenue from brand-new customers
- Gross retention is the same without adding expansion
Divide and express as a percentage
Divide the ending cohort revenue by its starting revenue. Above 100 percent means expansion outpaced losses.
Compare to gross retention
Gross revenue retention caps at 100 percent and shows pure leakage. The gap between NRR and GRR is your expansion engine.
Segment by cohort and plan
Break NRR down to find which segments expand and which churn, then double down on the expanders.
How Ardovo helps
Ardovo computes NRR and gross retention per cohort from live billing data and shows the expansion-versus-churn breakdown, so Rook can point you to the segments driving or dragging retention and flag accounts to save or grow.
Frequently asked questions
What is a good net revenue retention rate?
Above 100 percent is the goal, meaning your existing base grows even without new customers. Best-in-class SaaS often reaches 110 to 130 percent. Below 100 percent means churn and contraction are outpacing expansion, which caps growth.
What is the difference between net and gross revenue retention?
Gross revenue retention counts only losses (churn and contraction) and caps at 100 percent. Net revenue retention also adds expansion, so it can exceed 100 percent. The gap between them measures how much your expansion offsets your losses.
Does NRR include new customers?
No. NRR measures only the existing cohort from the start of the period: their expansion, contraction, and churn. New-customer revenue is excluded so the metric isolates how well you retain and grow the base you already had.