Net revenue retention

Net revenue retention is what an existing group of customers pays you a year later, expressed as a percentage of what they paid at the start. Upgrades and expanded usage count up; downgrades and cancellations count down. New customers are excluded entirely — that exclusion is what makes the number honest.

Above 100% is the line that changes everything. It means the customers you already have grow faster than they leave, so the business expands even in a month when you sell nothing. Below 100% means every new sale spends part of itself replacing what left, and the shortfall compounds: at 85%, roughly a sixth of your sales team's work each year is buying back ground you already owned.

The number is easy to flatter by measuring over too short a window or by including new logos. A year is the shortest honest period for an annual product, because most cancellations happen at renewal and a quarterly read will not have met one yet.

Worked: a cohort paying $40,000 a year at the start. Upgrades add $9,000, downgrades take $2,000, cancellations take $5,000. They now pay $42,000 — NRR of 105%. The same cohort with $12,000 of cancellations sits at 87.5%, and the difference is a growth rate, not a rounding error.