Retention
Gross Revenue Retention Rate
This metric indicates the percentage of recurring revenue retained from existing customers, excluding expansion revenue.
Explanation of metric
This chart displays the percentage of recurring revenue retained during the selected period from active subscriptions in the previous period, without considering the expansion effect.
How it's measured
Gross Revenue Retention Rate = (MRR in the selected period from subscriptions active in the previous period / MRR in the previous period) × 100, excluding any expansion during the period.
Note
Any subscription with the previous period MRR as 0 can be omitted.
Reading
An upward trend indicates growth in committed revenue.
Interpretation
Gross Revenue Retention (GRR) is a crucial financial metric that measures a company's capacity to preserve customers and sustain revenue, excluding expansion revenue from upsells, cross-sells, or upgrades. This metric is particularly significant for subscription-based businesses and those in the Software-as-a-Service (SaaS) sector, providing valuable insights into customer retention.
Example
In a given period:
Total MRR at the beginning of the period: $5,000
Total MRR at the end of the period: $6,000
Since GRR considers only the retention MRR without including any expansion, use the minimum MRR at the beginning and end of the period.
Gross Revenue Retention = ($5,000 / $5,000) = 1
Net Revenue Retention Rate
This metric shows the percentage of recurring revenue retained from existing customers.
Explanation of metric
This chart represents the percentage of recurring revenue retained during the selected period from subscriptions that were active in the previous period.
How it's measured
Net Revenue Retention Rate = (Total MRR at the end of the period / Total MRR at the beginning of the period) × 100
Reading
An upward trend indicates successful customer retention and growth through expansions, such as upsells and cross-sells, outpacing any losses due to churn.
Interpretation
This metric encompasses the overall revenue, incorporating expansion revenue while deducting revenue losses caused by churn, which includes contract expirations, cancellations, or downgrades. It provides a comprehensive view of a company's ability to retain and grow revenue from its existing customer base.
Example
In a given period: Total MRR at the beginning of the period: $5,000 Total MRR at the end of the period: $6,000 Net Revenue Retention = ($6,000 / $5,000) × 100 = 120%
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