Net revenue retention (NRR) measures how revenue from an existing customer cohort changes over time after accounting for customer losses, contraction, and expansion.
A common form is:
NRR = current-period revenue from the starting cohort ÷ prior-period revenue from that same cohort
If a cohort generated $100 million in the prior period and the same cohort generates $108 million in the current period after all churn, downgrades, upsells, and usage changes, NRR is 108%.
NRR can exceed 100%
Unlike Gross Revenue Retention, NRR includes expansion from retained customers.
That means strong upsell, cross-sell, usage growth, or contractual price increases can more than offset churn and contraction. An NRR above 100% indicates that the existing cohort expanded in aggregate under the issuer's definition.
NRR is not new-customer growth
New customers added after the cohort start are normally excluded from the numerator. NRR therefore asks how the existing base changed, while total revenue growth also reflects new-customer acquisition and other factors.
A company can have excellent NRR and weak total growth if new-customer additions slow. It can also grow rapidly despite weak NRR by spending heavily to replace lost customers.
The formula is not standardized across issuers
NRR is not a standardized GAAP measure. Some issuers use revenue, some use billings, some use annual recurring revenue, and some use another contract-value measure.
Measurement windows, customer cohorts, acquisitions, reseller arrangements, currency, customer consolidations, and which expansion sources count can all differ. BigCommerce, Intapp, DoubleVerify, and Vertex, for example, disclose materially different calculation details around similarly named NRR measures.
Connect NRR to unit economics
High NRR can improve Customer Lifetime Value because the retained cohort may spend more over time. But NRR alone does not reveal acquisition cost, gross margin, implementation cost, or the profitability of that expansion.
It should therefore be read with Customer Acquisition Cost, margin measures, and customer-count trends.
Investor interpretation
Preserve the issuer's cohort, revenue basis, measurement window, expansion and contraction rules, and acquisition/currency adjustments. An analyst-reconstructed NRR should be labeled as an estimate rather than presented as a reported company metric.
Sources
- BigCommerce 2025 Form 10-K, NRR definition
- Vertex 2025 Form 10-K, NRR definition and drivers
- DoubleVerify 2025 Form 10-K, revenue retention disclosures and comparability limitation
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