Metrics
How to Calculate Net Revenue Retention
A plain guide to the number investors usually ask about first.
Dana Whitlock
6 min read
Net revenue retention tells you how much of last year’s recurring revenue you still have today, after upgrades, downgrades and cancellations. New customers don’t count.
The formula
Take the MRR from a group of customers at the start of a period. Add their upgrades. Subtract their downgrades and cancellations. Divide the result by the MRR you started with.
If you started with 100,000, gained 12,000 from upgrades and lost 6,000 to downgrades and churn, your net revenue retention is 106%.
Why it matters
A figure above 100% means your existing customers grow on their own, even if you sign nobody new. That makes every future month easier to plan.
Common mistakes
Don’t mix in new customers, and keep the group fixed for the whole period. Report the same way every month, so the trend means something.
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