No. Net revenue retention is a cohort measurement. You fix the set of customers that existed on the first day of the period, then measure what that same set is worth on the last day. Customers acquired inside the period are excluded from both sides of the ratio.
The cohort rule
NRR = ending ARR of the starting cohort / beginning ARR of the starting cohort.
The denominator is locked on day one. Expansion, contraction, and churn inside that cohort move the numerator. Nothing that arrives later joins either side. A customer signed in month two of the quarter is invisible to that quarter's NRR and enters the calculation at the start of the next period.
What the leak looks like
The common error is running the calculation off total ARR at two dates. That version quietly includes new logos in the numerator and turns a retention metric into a growth metric.
| Approach | Beginning ARR | Ending ARR | Reported result |
|---|---|---|---|
| Cohort NRR | 10.0M from customers present on day one | 9.6M from those same customers | 96% |
| Total ARR compared across dates | 10.0M | 11.4M including 1.8M new logos | 114% |
Where new business belongs
New logo revenue has its own home. The ARR bridge walks beginning ARR to ending ARR through new customer ARR, expansion, contraction, and churn as separate lines, which is where acquisition and retention can sit side by side without contaminating each other. ORM reconciles this monthly, from beginning ARR through churned customer ARR, churned product ARR, and product decrease ARR on the way down, and new product ARR and increased product ARR on the way up, with gross and net retention read off the same chart.
Keeping the populations separate is what makes both numbers usable. Net revenue retention tells you whether the installed base compounds. Net new ARR tells you whether acquisition is working. Blended together they tell you neither.
Get the definition written down
Most NRR disputes are definitional rather than analytical. Before benchmarking against anyone, write down four decisions and hold them constant: the cohort start date, whether reactivated customers count as new, whether one-time fees are in the base, and how mid-period contract changes are dated.
Teams that skip this step end up defending the number instead of acting on it, and a metric that gets litigated every month has no influence on the sales forecasting process it was supposed to inform.
Frequently Asked Questions
Why are new customers excluded from NRR?
Because NRR answers one question: what happened to the revenue you already had. Adding new logos to the numerator would let an acquisition quarter mask an eroding base, which defeats the purpose of the metric. New business belongs in the ARR bridge and in net new ARR, both of which are built to measure it.
What happens if a new customer signs mid-period and expands before period end?
Both the initial contract and the expansion stay out of the NRR calculation for that period. The account enters the cohort at the start of the following period at its then-current ARR, and any growth from that point forward is expansion.
Do reactivated customers count as new or as retained?
Treat a returning customer as a new logo when it re-signs, because it was not in the starting cohort. Counting it as retained inflates NRR and understates churn in the period it originally left. Pick one rule, write it into the definition, and apply it consistently.
Can NRR exceed 100% without any new customers?
That is exactly the point of the metric. NRR above 100% means expansion from the existing base outran churn and contraction, so revenue would grow with zero acquisition. A company with strong NRR and weak new business still grows, and the reverse is a treadmill.
Put these metrics to work
ORM builds custom revenue forecast models that turn concepts like does net revenue retention include new customers? into prescriptive action for your team.
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