Net Revenue Retention (NRR)
Revenue from existing customers after expansions, contractions, and churn, as a percent of starting revenue.
Definition
NRR measures how much revenue is retained and expanded from existing customers over a period, excluding new customer revenue. NRR above 100% means expansion from existing customers exceeds lost revenue from churn and downgrades. Best-in-class SaaS companies achieve 120-140%+ NRR, meaning even without acquiring new customers, revenue grows 20-40% annually from the existing base.
Why it matters
NRR above 120% is a sign of exceptional product-market fit and pricing power. It means the company can grow even without new sales, making the business much more efficient and valuable. Companies with high NRR command premium valuations.
Example
A cohort of customers generated $1M in ARR last year. This year, after expansions ($200K), contractions ($50K), and churn ($80K), they generate $1.07M. NRR is 107%. A company like Snowflake has reported NRR above 170%.