THE ANGELWOOD GLOSSARY
Net Revenue Retention (NRR)
The percentage of recurring revenue retained from existing clients, including expansions, contractions, and churn.
DEFINITION FIRST
The percentage of recurring revenue retained from existing clients, including expansions, contractions, and churn.
Best for operators who need a quick definition first and then the operational context behind net revenue retention (nrr).
Definition
Net Revenue Retention measures how much recurring revenue you keep and grow from your existing client base. Unlike simple retention rate, NRR accounts for upsells (expansion revenue), downgrades (contraction), and churn. An NRR above 100% means you're growing revenue from existing clients even without new sales.
Why it matters
For firms with recurring engagement models, NRR is arguably more important than client count. You can lose clients but still grow if remaining clients expand their contracts. Top-performing firms achieve 110-130% NRR through strategic account growth.
AN ILLUSTRATION
Example
Starting MRR: $100,000. Expansion: +$15,000. Contraction: -$5,000. Churn: -$8,000. Ending MRR from existing: $102,000. NRR = 102%
The calculation
((Starting MRR + Expansion - Contraction - Churn) / Starting MRR) × 100- Starting MRR
- Monthly recurring revenue at period start
- Expansion
- Revenue from upsells and upgrades
- Contraction
- Revenue lost from downgrades
- Churn
- Revenue lost from cancelled clients
IN YOUR CLIENT WORK
Grow Revenue from Existing Clients
Angelwood helps identify expansion opportunities and protect against downgrades by tracking client engagement and satisfaction.
YOUR NEXT STEP