Net revenue retention (NRR) is a measure of the percentage of a company’s revenue that is retained over a given period of time. It is calculated by subtracting the amount of revenue lost from churn (customer turnover) from the total amount of revenue generated, and dividing the result by the total amount of revenue generated. For example, if a company generates $100 in revenue in a given month and loses $10 in revenue due to churn, its NRR for that month would be 90% (100 – 10 / 100).
Net revenue retention is considered the “north star” for companies because it is a key indicator of the health and growth of a business. A high NRR indicates that a company is successfully retaining its customer base and growing its revenue, while a low NRR may indicate that the company is struggling to retain customers and generate revenue. As such, NRR is an important metric for investors and analysts to consider when evaluating the performance of a company.