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Net revenue retention

Revenue from last year's customers this year, divided by what they paid last year, including upgrades, downgrades and cancellations but not new customers.

Above 100% means the existing base grows by itself: expansion more than offsets churn, so the company would grow even if it stopped selling to anyone new. That property is what justifies high ev-sales multiples for software.

It is also the metric most vulnerable to definitional creativity. Check the cohort definition, whether usage overages count, and whether customers acquired mid-year are included.

Example: Northwind Cloud's customers paid $164M last year and $186M this year after $31M of expansion and $9M of churn, giving 113% net revenue retention.

Related: churn-rate, annual-recurring-revenue, rule-of-40, unit-economics, customer-lifetime-value

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