Metrics & Performance
Last updated
Quick Answer
The percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn. Above 100% means existing customers are growing.
Net Dollar Retention Rate
NDR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100
Where
Net Dollar Retention (NDR), also called Net Revenue Retention (NRR), measures how much recurring revenue a company retains from its existing customer base over a defined period (usually 12 months), accounting for upgrades, downgrades, and churn. Formula: NDR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100. An NDR of 120% means that even without acquiring a single new customer, revenue from the existing base grew 20% year-over-year. Top SaaS companies achieve 120-150% NDR. Investors view NDR as one of the most important SaaS metrics because it indicates product stickiness, pricing power, and expansion potential. Companies with NDR above 130% can grow revenue 20%+ annually from existing customers alone.
Why It Matters
NDR is the single best predictor of long-term SaaS company health. A company with strong NDR can sustain growth even if new customer acquisition slows. VCs use NDR as a key qualifier: most Series B+ investors want to see 110%+ NDR for B2B SaaS companies. Public SaaS companies with NDR above 130% (Snowflake, Datadog, Twilio) trade at premium multiples.
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Net Dollar Retention (NDR), also called Net Revenue Retention (NRR), measures how much recurring revenue a company retains from its existing customer base over a defined period (usually 12 months), accounting for upgrades, downgrades, and churn.
Understanding Net Dollar Retention is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Net Dollar Retention falls under the metrics category in venture capital. This area covers concepts related to the quantitative measures used to evaluate fund and company performance.
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