NRR

Net Revenue Retention

A metric used by businesses to measure the revenue growth of their existing customer base. NRR measures the percentage of revenue retained from existing customers over a specified period of time, after accounting for any revenue lost due to churn or customer downgrades.

The formula for NRR is:

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Where:

• R_e = revenue generated from existing customers at the end of the period
• C_e = revenue lost from existing customers due to churn or downgrades during the period
• R_b = revenue generated from existing customers at the beginning of the period
• C_b = revenue lost from existing customers due to churn or downgrades at the beginning of the period

NRR is calculated by taking the revenue generated from existing customers at the end of a given period (such as a quarter or a year) and dividing it by the revenue generated from the same group of customers at the beginning of the period. This calculation takes into account any revenue lost due to customer churn, as well as any revenue gained from customer upgrades.

A high NRR score indicates that a business is retaining a significant portion of its existing revenue, and is growing its customer base through upsells, cross-sells, and other strategies. A low NRR score may indicate that a business is experiencing high levels of churn or customer downgrades, which can negatively impact revenue growth and overall business performance.

NRR is an important metric for businesses that rely on recurring revenue models, such as subscription-based services or SaaS companies. By measuring NRR, businesses can identify areas for improvement in their customer retention and revenue growth strategies, and take action to address these issues before they become more significant.

• Abbreviation: NRR