Blog · Board and management reporting
The complete net and gross revenue retention calculation on ten customers small enough to check by hand: ARR a year ago and now per customer, the four movements, expansion, contraction, churn and reactivation, per customer, the cohort split, gross retention capped and net uncapped, the reconciliation to the ARR bridge, and the identity that the movements sum, so a reader can reproduce every figure and then run it on their own subscription ledger.
Retention is a movement per customer and a sum, and on ten customers every movement can be read. This page works gross and net, the cohort split, the reconciliation to the bridge and the identity.
| Customer | Cohort | ARR then | ARR now | Movement | Amount |
|---|---|---|---|---|---|
| A | 2024 | $120,000 | $150,000 | Expansion | +$30,000 |
| B | 2024 | $80,000 | $80,000 | None | 0 |
| C | 2024 | $60,000 | $0 | Churn | −$60,000 |
| D | 2024 | $200,000 | $260,000 | Expansion | +$60,000 |
| E | 2024 | $40,000 | $30,000 | Contraction | −$10,000 |
| F | 2025 | $90,000 | $70,000 | Contraction | −$20,000 |
| G | 2025 | $110,000 | $0 | Churn | −$110,000 |
| H | 2025 | $50,000 | $65,000 | Expansion | +$15,000 |
| I | 2025 | $70,000 | $70,000 | None | 0 |
| J | 2025 | $0 (churned in 2025) | $20,000 | Reactivation | +$20,000 |
| Total | $820,000 | $745,000 | −$75,000 |
J is a reactivation: it was a customer, churned before the start, and came back. It is not new business; its starting ARR is zero and its return is a reactivation line.
| Movement | Amount |
|---|---|
| Expansion | 30 + 60 + 15 = $105,000 |
| Contraction | 10 + 20 = $30,000 |
| Churn | 60 + 110 = $170,000 |
| Reactivation | $20,000 |
| Net change | 105 − 30 − 170 + 20 = −$75,000 |
Matches the total change. Identity holds.
Gross retained = 820,000 − 170,000 − 30,000 = $620,000; gross retention = 620,000 ÷ 820,000 = 75.6% Net retained = 620,000 + 105,000 + 20,000 = $745,000; net retention = 745,000 ÷ 820,000 = 90.9%
| Cohort | Start | Churn | Contraction | Gross | Expansion | Reactivation | Net |
|---|---|---|---|---|---|---|---|
| 2024 | $500,000 | $60,000 | $10,000 | 86.0% | $90,000 | 0 | 104.0% |
| 2025 | $320,000 | $110,000 | $20,000 | 59.4% | $15,000 | $20,000 | 70.3% |
| All | $820,000 | $170,000 | $30,000 | 75.6% | $105,000 | $20,000 | 90.9% |
The 2024 cohort is growing from its base. The 2025 cohort lost four tenths of its starting ARR in a year. The combined figure of 91 percent shows neither.
| Bridge line, from the finance schedule | Σ these customers | Match |
|---|---|---|
| Expansion | $105,000 | Yes |
| Contraction | $30,000 | Yes |
| Churn | $170,000 | Yes |
| Reactivation | $20,000 | Yes |
| New business | not a retention movement |
J counted as new. Reactivation understated; new business overstated; the 2025 cohort's net reads 64 percent.
Gross uncapped. A's expanded $150,000 counted in gross; gross reads above what remained.
Company figure only. 91 percent, and the 2025 cohort at 70.
A customer in two cohorts. If D were listed under both, starting ARR would read $1,020,000 and every ratio would be wrong; the identity to the bridge would catch it.
The same movement per customer, summed per cohort, reconciled to the bridge. Covirage runs it on the subscription ledger every quarter. The net revenue retention guide covers the cohort table, and the gross and net guide covers reading the pair.
Not in retention. Retention is about the customers that were there at the start. New customers in the year are a separate bridge line, new business, and they join a cohort for next year's retention.
Because gross asks how much of the starting ARR is still there, and the answer cannot exceed all of it. A customer that expanded contributes its starting ARR to gross retained, not its expanded ARR. The expansion goes to net.
The ARR bridge for the year has lines for expansion, contraction, churn, reactivation and new. The sum of each movement across these ten customers equals the bridge's line for it. If the bridge says churn was $400,000 and the customers sum to $350,000, a customer is missing or in two states.