Lazy NRR is Not NRR. Accept No Imitations or Subtitutes.
Kellblog
OCTOBER 5, 2022
The other day I was looking at an ARR bridge [1] with a young finance ace. He made a few comments and concluded with, “and net revenue retention (NRR) is thus 112%, not bad.”. I thought, “Wait, stop! You can’t calculate NRR from an ARR bridge [2].” It’s a cohort-based measure. You need to look at the year-ago cohort of customers, get their year-ago ARR, get that same group’s current ARR, and then divide the current ARR by the year-ago.
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