Net revenue retention

Measure how the recurring revenue base from an opening customer cohort changes after expansion, contraction and churn, excluding new customers.

Quick answer

Net revenue retention, or NRR, compares the current recurring revenue from a defined opening customer cohort with that cohort's recurring revenue in the comparison period. It includes expansion, contraction and churn and excludes recurring revenue from new customers added after the opening date.

Use the worked example

Meaning and transaction use

An SEC filing calculates dollar-based net retention by comparing current ARR from the same prior-period customer cohort with prior-period ARR, including expansion and netting contraction or attrition while excluding new customers. [S1]

Another SEC filing defines NRR as a comparison of ARR from the same customer set at two points in time. [S2]

Proposed control method: reconcile NRR through a customer-level bridge and retain contract evidence for each movement class.

Worked example

Illustrative annual NRR only. Assume opening-cohort ARR of 10.0 million, expansion of 1.8 million, contraction of 0.6 million and churn of 0.9 million.

Scroll the table horizontally to view all columns.

Measure	Calculation	Result
Opening-cohort ARR	Given	10.0m
Closing-cohort ARR	10.0 + 1.8 - 0.6 - 0.9	10.3m
Net cohort change	10.3 - 10.0	0.3m
NRR	10.3 / 10.0	103.0%

Illustrative NRR is 103.0%; expansion exceeds contraction and churn by 0.3 million.

Proposed transaction review process

Freeze the cohort

Identify opening customers and recurring revenue at the comparison date.

Classify movements

Record expansion, contraction, churn and permitted reactivations.

Reconcile contracts

Tie changes to amendments, renewals, billing and customer status.

Analyse drivers

Review product, segment, geography, cohort and concentration trends.

Evidence checklist

Opening cohort

Customer list, recurring value and measurement date.

Expansion

Upsell, cross-sell, volume and price-change records.

Contraction and churn

Downgrades, cancellations, credits and end dates.

Reconciliation

Customer-level bridge to closing recurring revenue.

Decision framework

Situation	Proposed action
NRR falls below plan	Separate churn, contraction and weak expansion drivers.
A few customers drive expansion	Report concentration and downside sensitivity.
Definitions changed	Restate prior periods or disclose the comparability limit.
NRR exceeds 100% while GRR weakens	Address base losses hidden by expansion.

Common errors to check

Including new-customer revenue.
Changing the opening cohort during the period.
Mixing revenue and ARR bases.
Reporting the percentage without a movement bridge.

Reconcile net retention

Bring customer-level ARR movements and renewal records to an NRR review. Separate expansion, contraction and churn drivers.

Discuss the transaction

Primary references and editorial scope

SEC filing: Dollar-based net retention calculation
Example customer-cohort NRR calculation including expansion and netting contraction or attrition while excluding new customers. Reference checked 17 September 2026.
SEC filing: NRR as same-customer ARR comparison
Example NRR definition comparing ARR from the same customer set across measurement dates. Reference checked 17 September 2026.

Editorial qualification

General transaction education using public United States filings. Figures are hypothetical. NRR is a non-standard operating metric whose definition can differ by company.

General business information. Obtain advice appropriate to the legal, tax, accounting and financing facts. No offer, lender commitment or transaction outcome is represented. All worked examples use expressly assumed figures. Editorial draft date: 17 September 2026.