Net dollar retention
net DOL-ur ree-TEN-shun
The percentage of revenue retained from existing customers after expansion, contraction, and churn. Above 100% means you grow without new sales.
NDR measures what happened to a cohort of customers over a year. Take the ARR from customers you had twelve months ago. Now look at what those same customers pay today. Include upgrades, include downgrades, include cancellations. What is the ratio?
If you started with $1M in ARR from a cohort and those same customers now pay $1.1M, your NDR is 110%. You grew revenue from your existing base without adding a single new customer. NDR above 100% means your expansion revenue outpaces your churn. Below 100% means you are shrinking from within.
The top SaaS companies have NDR above 120%. Snowflake hit 169% at IPO. But NDR can hide problems. A company with 75% gross retention and 110% NDR is losing a quarter of its customers every year and papering over it with aggressive upsells. That works until you run out of room to expand the survivors.
Examples
A usage-based platform like Snowflake.
Customers who spent $1M last year now spend $1.69M this year. NDR is 169%. Expansion from increased data usage far outpaces any churn.
A developer tools company with moderate churn.
You had $5M in ARR from 2024 customers. Of that, $4.5M renewed, $200k churned, $300k contracted, but $1.2M expanded. Your NDR is ($4.5M - $300k + $1.2M) / $5M = 108%.
A struggling SaaS company.
Your 2024 cohort paid $3M. This year, $600k churned, $200k contracted, and only $100k expanded. NDR is 77%. You need to acquire $700k in new ARR just to stay flat.
In practice
Read more on the blog
Frequently asked questions
What is a good NDR for a SaaS company?
Above 100% means you are growing from existing customers. Above 120% is excellent. The best SaaS companies sustain 130% or higher. Below 100% means your existing customer base is shrinking and every new customer partially fills a hole.
What is the difference between NDR and gross retention?
Gross retention measures renewals and churn only, ignoring expansion. NDR includes expansion. A company with 75% gross retention and 110% NDR is losing customers fast but upselling the survivors aggressively. Gross retention tells you about product stickiness. NDR tells you the net financial outcome.
Related terms
The percentage of revenue retained from existing customers before counting expansion. Measures pure customer stickiness.
Additional revenue from existing customers through upsells, cross-sells, and increased usage. The engine of net-negative churn.
The rate at which customers cancel or do not renew. Measured as logo churn (customers lost) or revenue churn (dollars lost).
The annualized value of your active subscription contracts. The heartbeat metric of every SaaS business.
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