What is net revenue retention?
Net revenue retention (NRR) is the share of recurring revenue a company keeps from the customers it already had at the start of a period, usually 12 months, after their expansion, contraction and churn, and before any new customers. Above 100% the existing base grew on its own; below 100% it shrank.
How NRR and GRR are calculated
Start from the opening ARR of the customers you had, add their expansion, subtract their contraction and churn, and divide by the opening ARR. Gross revenue retention (GRR) leaves expansion out, so it can never pass 100%.
NRR = (Opening ARR + Expansion − Contraction − Churn) ÷ Opening ARR
GRR = (Opening ARR − Contraction − Churn) ÷ Opening ARR
A worked example
In the illustrative example workspace, Gloaming Fescue Inc's customers held $6.42M of ARR in July 2025. Over the 12 months to June 2026 they moved like this, with new customers left out.
| Operation | Line | Figure |
|---|---|---|
| Opening ARR, July 2025 | $6.42M | |
| + | Expansion | $1.55M |
| − | Contraction | $0.24M |
| − | Churn | $0.15M |
| = | Kept from the opening customers | $7.58M |
| ÷ | Opening ARR | $6.42M |
| = | Net revenue retention | 118% |
Gross revenue retention on the same customers is ($6.42M − $0.24M − $0.15M) ÷ $6.42M, or 94%. The $0.84M of new business adds to ARR and to neither ratio.
Common mistakes
Letting new customers in
Revenue from customers who arrived during the period is growth, not retention. Including it lifts NRR without anyone being retained.Comparing figures on different bases
An NRR on ARR and an NRR on recognised revenue are both valid and rarely equal. Before comparing 2 companies or 2 quarters, check that both use the same basis and the same 12 months.Reading NRR without GRR
A high NRR can hide heavy churn offset by a few large expansions. GRR shows what was lost before expansion is counted.
How Verlix handles it
Verlix reports NRR and GRR from the contracts themselves and forecasts both 12 months forward, each with the range it may land in. It reads how much of each commitment is spent and how many seats are active, which is where contraction and churn show first.
Revenue forecasting and churn predictionRelated terms
ARR
The yearly value of committed recurring revenue, measured on one day.ARR waterfall
How ARR moved over a period: new, expansion, contraction and churn.