Net Revenue Retention (NRR) measures the percentage of recurring revenue retained from existing customers over a specific period, accounting for upgrades, downgrades, and churn. NRR provides insights into customer satisfaction and the effectiveness of upselling and cross-selling strategies. A high NRR indicates strong customer retention and growth potential from the existing customer base.

NRR is calculated by adding expansion revenue (upgrades and cross-sells) to starting revenue, subtracting churned revenue (downgrades and cancellations), and dividing by the starting revenue.

1. Basic Example: A company starts the month with $100,000 in revenue, gains $20,000 in expansion revenue, and loses $10,000 in churned revenue. The NRR is:

\begin{align}\text{NRR} &= \left(\frac{100,000 + 20,000 - 10,000}{100,000}\right) \times 100 \cr&= 110\%\end{align}

2. Quarterly Example: A company starts the quarter with $200,000 in revenue, gains $30,000 in expansion revenue, and loses $20,000 in churned revenue. The NRR is:

\begin{align}\text{NRR} &= \left(\frac{200,000 + 30,000 - 20,000}{200,000}\right) \times 100 \cr&= 105\%\end{align}