What it means
Gross revenue retention, or GRR, measures how much recurring revenue you keep from the customers you already had. Take a group of customers from twelve months ago and their annual recurring revenue then. Subtract what they've since cut back and what cancelled customers took with them. What's left, as a percentage of where they started, is GRR.
Upgrades are left out entirely. That's the point of the metric, and it's why GRR can never exceed 100%. It's a metric, not a GAAP figure, so say how you define it.
Net revenue retention, NRR, uses the same customers but adds expansion back. A product can show 120% NRR while losing a fifth of its base, if a few large accounts grow fast enough to cover it. GRR shows the churn NRR can hide, so investors ask for both and read them together.
Compute it per customer where you can: each customer counts at the lower of what they paid then and what they pay now. That stops one customer's upgrade from offsetting another's downgrade inside the same account group.
A cohort started the year at $400,000 of ARR. Customers downgraded by $10,000 and cancellations took $20,000. GRR is $370,000 ÷ $400,000, or 92.5%. The same customers also expanded by $90,000, so NRR is $460,000 ÷ $400,000, or 115%.
GRR is built from the same movements as ARR: new, expansion, contraction and churn. Keep the definitions in one place, start from the billing system, and tie the cohort's starting ARR to the ARR you reported a year ago.
Why it matters. Net revenue retention can hide heavy churn behind a few large upgrades. Gross retention shows how much of the base stays with no help from expansion, and investors ask for both.
Try it with your numbers
Change any number. The working below updates as you type.
GRR = (Starting − Contraction − Churn) ÷ StartingCustomers active twelve months ago, at what they paid then.
Upgrades and added seats. GRR leaves this out.
Downgrades.
Customers who cancelled.
Gross revenue retention
92.5%
How it’s worked out
- 1Kept, ignoring expansion$400,000.00 − $10,000.00 − $20,000.00$370,000.00
- 2Gross revenue retention$370,000.00 ÷ $400,000.0092.5%
- 3Same customers today$370,000.00 + $90,000.00$460,000.00
- 4Net revenue retention, for comparison$460,000.00 ÷ $400,000.00115.0%
Same cohort, twelve months apart. GRR ignores expansion, so it can't exceed 100%; NRR adds expansion back. New customers count in neither. Neither is a GAAP figure.
Common questions
Can gross revenue retention be over 100%?
No. It ignores expansion, so the most it can be is 100%, meaning no customer downgraded or left.
How is it different from logo churn?
Logo churn counts customers lost. GRR counts revenue lost, so losing one large customer hurts GRR far more than losing several small ones.
What period should we use?
Usually twelve months, comparing the same customers a year apart. Monthly GRR is possible but say so, because it isn't comparable to an annual figure.
Where it comes up
The glossary entries, founder guides and lessons on this site that use the term and link here.
Read further
General information for US companies, not tax, legal or accounting advice. Check the specifics with a CPA before you act on them.