Formula
NRR = MRR today from customers who had MRR 12 months ago
÷ those customers’ MRR 12 months ago
(both at today’s exchange rates)Worked example
Illustrative figures. Customers won during the year are not part of the calculation.
| Line | USD |
|---|---|
| Their MRR 12 months ago | 100,000 |
| Expansion | 15,000 |
| Contraction | (5,000) |
| Churn | (8,000) |
| Their MRR today | 102,000 |
NRR = 102,000 ÷ 100,000 = 102.0%
Why constant currency matters
If part of your book is billed in euros or pounds, NRR measured at each period’s own rates moves with the dollar. A customer who renewed flat can look like expansion one year and contraction the next.
Converting both periods at the same rates removes that effect, so NRR reflects what customers did.
Trailing twelve months and other versions
NRR is also quoted monthly, annualised, or by annual cohort, and some companies leave reactivations out. Each is defensible. What matters is to state the definition in the pack and keep it. A trailing twelve-month calculation across all customers is easy to reconcile to the MRR history.
Report NRR with GRR
Strong expansion from a few large customers can hide churn in NRR. Gross revenue retention caps each customer at their starting MRR, so it only moves when you lose revenue. Put the two side by side.
How Revnewed calculates it
NRR is calculated on a trailing twelve-month basis: MRR today from customers who had MRR twelve months ago, divided by their MRR then, with both periods at today’s rates.
GRR uses the same customers and rates, with each customer capped at their MRR twelve months ago. Both appear on the overview and in the board pack.
Common mistakes
- Including new customers
- Revenue from customers won during the year belongs in growth, not retention.
- Different exchange rates for each period
- Retention then measures the dollar as much as your customers.
- Bookings instead of MRR
- Multi-year renewals signed in the period inflate a bookings-based NRR.
- NRR without GRR
- A healthy NRR can sit on top of a churn problem.