Net revenue retention

Net revenue retention measures how much recurring revenue a company keeps and grows from its existing customer base over a period, typically a year, excluding any revenue from brand new customers. It's one of the defining metrics for subscription and software businesses, since it isolates how healthy the existing customer relationships are, separate from how good the company is at signing up new logos.

The formula is:

A net revenue retention rate above 100% means that even if the company never signed a single new customer, its revenue from existing customers alone would still grow, because upsells and expansion within existing accounts are outpacing whatever churn and downgrades occur. A rate below 100% means the existing customer base is shrinking in revenue terms, and the company has to keep adding new customers just to offset that decline before it can grow at all.

Investors treat net revenue retention as one of the clearest signals of product quality and customer satisfaction in a subscription business. A company with a rate consistently well above 100% has a business that compounds on its own, existing customers expand their spending over time, which tends to support durable growth and improving efficiency as the customer base matures. A declining or sub-100% rate is often an early warning of product or competitive problems, showing up in this metric before it fully shows up in the topline growth rate.