Quick answer
Learn how to calculate net revenue retention for SaaS using starting MRR, expansion, contraction and churned revenue.
Core formulas
NRR = (starting MRR + expansion MRR - contraction MRR - churned MRR) / starting MRR
NRR includes expansion from existing customers, so it can be above 100%.Net revenue churn = (contraction MRR + churned MRR - expansion MRR) / starting MRR
Negative net revenue churn means expansion is larger than revenue lost.Ending existing-customer MRR = starting MRR + expansion MRR - contraction MRR - churned MRR
Exclude new customer MRR when calculating NRR.Worked example
NRR example
- Starting MRR from existing customers is $50,000.
- Expansion MRR is $6,000.
- Contraction MRR is $2,000 and churned MRR is $3,000.
What NRR tells you
NRR measures the strength of the existing customer base. A SaaS business with high NRR can grow even before adding new customers because expansion offsets contraction and churn.
This makes NRR different from top-line MRR growth. MRR growth can be driven by new acquisition. NRR isolates what happened inside the customers you already had at the start of the period.
- NRR above 100% means expansion more than offset contraction and churn.
- NRR below 100% means the existing customer base shrank before new acquisition.
- NRR should exclude new customers so acquisition does not hide retention problems.
How to calculate it cleanly
Start with MRR from the same customer cohort at the beginning of the period. Add expansion from those customers. Subtract contraction and churn from those customers. Divide the result by starting MRR.
The most common mistake is adding new customer MRR. New MRR belongs in total MRR growth, but not in NRR.
How to use it with other SaaS metrics
Use NRR beside gross revenue retention. NRR shows the expansion-adjusted view. GRR removes expansion so you can see raw retention quality. When both are strong, the revenue base is usually healthier.
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FAQ
Can NRR be above 100%?
Yes. NRR can be above 100% when expansion MRR from existing customers is larger than contraction and churned MRR.
Should new customer revenue be included in NRR?
No. NRR is about the existing customer base. New customer MRR should be tracked separately as acquisition performance.
Is NRR the same as net revenue churn?
They are related. Net revenue churn is the revenue loss after expansion. NRR is the retained revenue after expansion, usually expressed as a percentage.