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Glossary → Business Model & Operating KPIs → Net Revenue Retention (NRR)
Term · Business Model & Operating KPIs

Net Revenue Retention (NRR)

Core
In briefNet revenue retention shows how the recurring revenue of a customer cohort develops, including expansion, downgrades and cancellations. For SaaS small caps it is considered a core indicator of product value, pricing power and growth from the existing base without new customers.

Definition

Measures how the revenue of an existing customer cohort develops, including expansion, downgrades and cancellations.

How it is calculated

Formula. NRR = (starting revenue + expansion − downgrades − churn) ÷ starting revenue. The metric is not standardised; the issuer's definition and delineation are authoritative.

Why it matters for small caps

For SaaS small caps NRR is a core indicator of product value, pricing power and organic growth without the need to acquire new customers.

Common misreadings

  • An NRR above 100% is celebrated in isolation; it must be considered together with gross margin, churn and sales costs.

In the process

→ Used in Step 4 – Business model

Frequently asked

What is net revenue retention (NRR)?
It shows how much revenue from an existing customer base is retained or grows over time. It accounts for add-on purchases, downgrades and churn.
How is NRR calculated?
You relate starting revenue plus expansion less downgrades and churn to the starting revenue. Since the metric is not standardised, the issuer's exact definition matters.
Why is an NRR above 100 percent not meaningful on its own?
A high value is easily celebrated in isolation. Only together with gross margin, churn and sales costs does a sound picture emerge.

Related terms

ARRChurn RateCAC

Sources

Primary
Methodology
Category: Business Model & Operating KPIs · SaaS & SubscriptionRelevance: CoreJurisdiction: International

Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.