Metrics & Performance
NRR
Net Revenue Retention — the percentage of recurring revenue retained from existing customers over a period, including expansions and contractions. Same concept as NDR (Net Dollar Retention).
NRR (Net Revenue Retention) measures the year-over-year change in recurring revenue from an existing cohort of customers, accounting for both expansion revenue (upgrades, upsells) and lost revenue (churn, downgrades).
NRR is functionally identical to NDR (Net Dollar Retention) — the terms are used interchangeably in the industry. Some companies prefer 'NRR' while others prefer 'NDR'; the formula is the same:
NRR = (Beginning ARR + Expansion − Contraction − Churn) / Beginning ARR × 100
NRR above 100% means a company grows revenue from existing customers alone. This is the gold standard for SaaS businesses: it implies the company would grow even if it acquired zero new customers.
Benchmarks: >130% world-class (Snowflake, Datadog), >110% excellent, 100–110% solid, <100% concerning.
In Practice
A company starts the year with $10M ARR from existing customers. By year end, those same customers generate $12M ARR ($2M in expansions, $500K in churn, $500K in downgrades). NRR = ($10M + $2M − $0.5M − $0.5M) / $10M = 110%.
Why It Matters
NRR is a leading indicator of product-market fit and customer health. High NRR means customers are getting more value over time, not less. It also has powerful compounding effects — a 120% NRR business doubles revenue from existing customers in 3.8 years with zero new sales. Investors treat NRR as one of the most important valuation drivers for SaaS companies.
VC Beast Take
NRR and GRR together tell the complete retention story: GRR shows how much you hold before expansion; NRR shows the full picture including growth. A company can have great NRR (110%) but mediocre GRR (80%) — meaning it's winning back revenue through upsells but losing a lot of customers. That's a concerning pattern: the expansions may be masking high underlying churn.