SaaS metrics

Net revenue retention (NRR)

Also known as NDR

Net revenue retention measures how much recurring revenue you keep from existing customers over a year, including expansion and after subtracting downgrades and churn.

Parag Jain, CPA
Parag Jain, CPAFounder, Zinance·Last updated July 2026
Summarize this article

Key takeaways

  1. NRR = (Starting ARR + Expansion − Contraction − Churn) ÷ Starting ARR
  2. Good: 100%+; best-in-class: 120%+
  3. NRR above 100% means the business compounds even if new sales stall, which is exactly what seed and Series A investors underwrite in diligence.

What is net revenue retention (NRR)?

Net revenue retention measures how much recurring revenue you keep from existing customers over a year, including expansion and after subtracting downgrades and churn. Above 100% means your installed base grows on its own, before adding a single new logo. It's the clearest signal of durable, compounding SaaS growth.

Formula

Formula

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

  • Starting ARRRecurring revenue from the cohort at period start
  • ExpansionUpsell, cross-sell, and seat growth in the cohort
  • ContractionDowngrades and reduced seats
  • ChurnARR lost from cancelled customers

Worked example

Start the year with $2M ARR from a cohort, add $360K expansion, lose $80K to downgrades and $180K to churn. NRR = ($2M + $360K − $80K − $180K) ÷ $2M = 105%.

Benchmarks by stage

Median venture-backed SaaS NRR is ~106%; Bessemer calls 100% good, 110% better, 120%+ best-in-class.

Source: SaaS Capital / Bessemer State of the Cloud (2025)

Why it matters for fast-growing companies

NRR above 100% means the business compounds even if new sales stall, which is exactly what seed and Series A investors underwrite in diligence. It also lets you grow revenue on lower burn, extending runway between rounds.

SaaS metricsGross revenue retention (GRR)Gross revenue retention measures how much recurring revenue you keep from existing customers over a year, counting only churn and downgrades and ignoring expansion.SaaS metricsMRR and ARRMRR (monthly recurring revenue) and ARR (annual recurring revenue) both measure predictable subscription revenue; ARR is simply MRR × 12.SaaS metricsRule of 40The Rule of 40 says a healthy SaaS company's revenue growth rate plus its profit margin should total at least 40%.Cash & runwayBurn multipleBurn multiple is a capital-efficiency metric that measures how much cash a startup burns to add one dollar of net new annual recurring revenue.Unit economicsLTV:CAC ratioThe LTV:CAC ratio compares the lifetime gross profit from a customer to the cost of acquiring them.

Frequently asked questions

What is a good NRR for a startup?+
For most seed to Series A SaaS, 100% or above is healthy and 110%+ is strong. Median venture-backed NRR is around 106%. SMB-focused products often run 95–100%, while enterprise-heavy books can clear 115–120% on expansion.
What's the difference between NRR and GRR?+
NRR includes expansion revenue, so it can exceed 100%; gross revenue retention (GRR) excludes expansion and caps at 100%. NRR shows net growth of your base; GRR shows how much you'd keep with zero upsell, isolating true churn risk.

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