Net Dollar Retention (NDR)

Net Dollar Retention measures the percentage of revenue retained from a specific cohort of customers over a defined period, including the effects of expansion, contraction, and churn on that original dollar amount.

NDR and NRR are often used interchangeably, and for most practical purposes they measure the same thing: how much revenue from your existing base survived and grew. The nuance is that NDR typically tracks a fixed dollar cohort (what happened to the $50M in ARR we had on January 1), while NRR can be calculated on a rolling basis. For board reporting and PE diligence, the terms are functionally equivalent.

NDR above 110% means your existing customer base is growing faster than it's shrinking. You add new logos on top of an expanding foundation. NDR below 100% means your base is eroding and every dollar of growth requires more than a dollar of new sales to compensate. This is the compounding math that separates SaaS companies trading at 12x revenue from those trading at 6x.

The path from 95% NDR to 110% NDR requires two concurrent motions. First, reduce gross churn from 9-10% to 6% or below. That's the retention floor. Second, build a CS-driven expansion motion that generates 15-20% annual growth from existing accounts. Neither motion alone gets you there. Reducing churn to 6% with flat expansion gives you 94% NDR. That's better but still below 100%. Adding 16% expansion on top of 6% churn gives you 110%. Both levers need to move.

Related terms: Net Revenue Retention, Expansion Revenue, The Churn Tax

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