Net Revenue Retention (NRR)

TL;DR

The percentage of recurring revenue retained from a cohort after one year, including expansion, contraction, and churn.

NRR measures whether a customer cohort spends more or less with the company a year after they entered. NRR > 100% means expansion exceeds churn — the cohort is worth more even before considering new customers. NRR > 120% is the bar for top-decile B2B SaaS.

High NRR is the strongest available proof of structural value. It compounds over time and dramatically reduces the company's need for new logos. Low NRR is the leading indicator of a leaky bucket no acquisition motion can fix.

Formula

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

• Starting MRR — Recurring revenue from the cohort at the start of the period
• Expansion — Upsell, cross-sell, and seat growth in the period
• Contraction — Downgrades and seat reductions in the period
• Churn — MRR lost from cancelled customers in the period

NRR > 100% means the cohort grew net of churn — the gold-standard SaaS retention signal.

Worked example

Cohort started year with $1.0M ARR. End-of-year: $1.10M from expansion + $0.05M still-active − $0.18M churned − $0.05M downgraded = $0.92M from the original cohort. NRR = $1.32M ÷ $1.0M = 132% — strong land-and-expand.

Common pitfalls

• Reporting NRR over too short a window (3 months instead of 12).
• Including new logos in NRR, which inflates the number.
• Hiding contraction inside churn instead of reporting it separately.

When this shows up in a pitch deck

NRR is the headline retention metric on the Traction slide for B2B SaaS. Tiger Global, Sequoia, and a16z all weight NRR heavily.

See Net Revenue Retention in context

Net Revenue Retention shows up most often in these scoring rubrics and investor profiles — jump straight to who cares about it and how to pitch them.

In VC frameworks

• Tiger Global — pitch deck framework

For investor types

• Growth VC — Series A & B

Related terms

• Gross Revenue Retention — The percentage of recurring revenue retained from a cohort after one year, excluding expansion — the pure retention metric.
• Logo Churn — The percentage of customers (logos) who cancel in a given period, regardless of how much revenue they represented.
• Revenue Churn — The percentage of recurring revenue lost from existing customers in a period through cancellation or downgrade.
• Land and Expand — A motion where a small initial deployment grows into a much larger account through additional seats, products, or use cases.
• Cohort Analysis — Grouping users by sign-up period and tracking each group's behavior over time to spot trends invisible in aggregate metrics.

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