Net revenue retention formula
NRR compares what a fixed group of customers pays at the end of a period with what the same customers paid at the start. CrowdStrike’s 10-K describes its dollar-based net retention rate this way: current-period ARR from a customer cohort divided by that cohort’s ARR a year earlier, including expansion and net of contraction and churn.[1] New customers are excluded, so NRR above 100% means the existing base grows on its own.
- Net revenue retention110%
- Gross revenue retention92%
- Expansion rate18%
- Revenue churn rate8%
NRR vs GRR
Gross revenue retention leaves out expansion, so it can never be above 100%: it shows how much revenue you keep before upsells. NRR adds expansion back. A company with 92% GRR and 110% NRR loses 8% of its base each year and makes it up with upgrades. ARR itself is defined in filings as the annualized value of active subscriptions; Amplitude’s 10-K is one example.[2] For the full bridge from starting to ending ARR, including new customers, use the ARR formula page.
Monthly NRR to annual
Monthly retention compounds, so annual NRR is the monthly rate to the 12th power, not 12 times the monthly change. 101% a month is 112.7% a year.
| Monthly NRR | Annual NRR |
|---|---|
| 97% | 69.4% |
| 98% | 78.5% |
| 99% | 88.6% |
| 100% | 100% |
| 101% | 112.7% |
| 102% | 126.8% |
Small monthly gaps grow large: 98% a month is under 80% a year. The same compounding applies to customer churn on the churn rate calculator, and retained revenue feeds lifetime value on the customer lifetime value calculator. Repeat business is the core of customer value models for this reason.[3]
NRR mistakes
- Counting new customers. Revenue from customers won during the period belongs in growth, not retention.
- Mixing MRR and ARR. Use the same unit for start, expansion and churn; annual plans divided by 12 for MRR.
- Annualizing by multiplying. Monthly 101% is about 112.7% a year, not 112%. Compound it.
Frequently asked questions
How do you calculate net revenue retention?
(Starting recurring revenue + expansion − contraction − churn) ÷ starting revenue, for customers you had at the start. ($100,000 + $18,000 − $8,000) ÷ $100,000 = 110%.
What is the difference between NRR and GRR?
NRR includes expansion and can exceed 100%; GRR excludes expansion and is capped at 100%.
Is net revenue retention the same as net dollar retention?
Yes. Companies use net revenue retention, net dollar retention and dollar-based net retention rate for the same idea; check each filing’s definition.
How do I convert monthly NRR to annual?
Raise the monthly rate to the 12th power: 0.99¹² ≈ 88.6%.