Net revenue retention (NRR) is recurring revenue now from a set of customers over their recurring revenue twelve months ago, including expansion, so it can exceed 100 percent. Decomposes into expansion, contraction, churn and reactivation. Gross retention is the same without expansion, capped at 100.
Net revenue retention measures how much of last year's recurring revenue a company still earns from the same customers, after upgrades, downgrades and cancellations. Above 100 percent, the existing base grows on its own; below it, the base shrinks before any new customer is won.
The company figure hides the cohort that is failing. Compute per signing cohort and reconcile the sum to the bridge.
A churned customer returning is a cohort movement, not a new logo.
Recurring revenue now from customers who were active twelve months ago, divided by their recurring revenue then. New customers are excluded from both. NRR % = (starting ARR + expansion + reactivation − contraction − churn) ÷ starting ARR × 100.
Customers paying $7.1 million a year ago lost $0.40 million to churn and $0.24 million to contraction, and added $0.84 million of expansion. They pay $7.1 − 0.40 − 0.24 + 0.84 = $7.3 million now: $7.3 ÷ $7.1 = 103 percent. Gross retention, capping each at its prior figure, is $6.46 ÷ $7.1 = 91 percent.
New customers in the numerator. The figure becomes a growth rate and hides churn.
For the formulas in a spreadsheet, see how to calculate net revenue retention in Excel; for benchmarks, what is a good net revenue retention.