Net Revenue Retention (NRR)
Definition
The percentage of recurring revenue retained from existing customers over a period, including expansion and after churn and contraction. An NRR above 100% means the existing base grows even without new customers.
Related Terms in Financial Analysis
Gross Revenue Retention (GRR)
The percentage of recurring revenue retained from existing customers before counting any expansion, so it cannot exceed 100%. It isolates how much revenue is lost to churn and downgrades.
Annual Contract Value (ACV)
The annualised value of a customer contract, normalising deals of different lengths to a yearly figure. It helps compare and forecast recurring revenue across a customer base.
Total Contract Value (TCV)
The full value of a customer contract over its entire term, including recurring and one-off charges. Unlike ACV it reflects the whole commitment rather than a single year.
Rule of 40
A benchmark for software businesses holding that a company's revenue growth rate plus its profit margin should total at least 40%. It balances the trade-off between growing fast and being profitable.
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