Software Growth

Net Revenue Churn

Net revenue churn subtracts expansion from recurring revenue lost in an existing customer cohort.

Net revenue churn measures the loss of recurring revenue from existing customers after expansion offsets contraction and cancellations. It can be negative when those customers expand more than they reduce or terminate subscriptions.

Example

An opening cohort has $60,000 MRR. It loses $3,000 to churn and $1,000 to downgrades, while upgrades add $7,000. Net revenue churn is negative 5%: the cohort’s MRR grows by $3,000.

Growth without signing a new customer. The same customer base • $30,000 − $900 − $300 + $1,500 = $30,300 Fictional monthly example: −1% net revenue churn = 101% net revenue retention.
Fictional monthly example: −1% net revenue churn = 101% net revenue retention. Source / framework reference.

How to use it

Use net and gross churn together. In this example, net churn looks favorable but $4,000 of recurring losses still deserve investigation. A single unusually large upgrade may create a flattering month, so examine repeated periods and the distribution across customers.

Under matching definitions, net revenue churn equals 100% minus NRR. New customer revenue must remain outside the calculation. A negative percentage is expansion rather than a negative count of departing customers; customer churn can remain positive at the same time.

Further reading: ChartMogul on Net Revenue Churn.

Related: Net revenue retention, Negative churn.

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