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The percentage of recurring revenue kept from an existing customer cohort over a period, after expansion, contraction and churn.

NRR shows whether the existing customer base grows on its own, so it is a core input for SaaS valuations, growth planning and how much a company must spend on new acquisition to reach revenue targets.

A company starts the year with $1,000,000 ARR from existing customers, gains $180,000 from upsells, loses $40,000 to downgrades and $90,000 to churn. NRR is ($1,000,000 + $180,000 − $40,000 − $90,000) ÷ $1,000,000 = 105%.

Methods vary on period, cohort definition and whether usage or one-time revenue counts, so figures are not comparable across companies. A high NRR can hide heavy logo churn when a few large accounts expand, so pair it with gross revenue retention.

NRR equals starting recurring revenue from a cohort, plus expansion, minus contraction and churned revenue, divided by starting recurring revenue, times 100. It is calculated on Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR) for the same customers only, and revenue from new customers is excluded. Values above 100% mean expansion such as Upselling outweighs the losses tracked by Churn Rate. Gross revenue retention uses the same formula without expansion.