/plushcap/analysis/fivetran/nrr-doesnt-matter

NRR doesn't matter

What's this blog post about?

The text discusses a mathematical observation about the relationship between net revenue retention (NRR) and revenue growth in businesses with different levels of growth. It explains that if a company's customer growth rate is higher than its expansion rate, the overall revenue growth rate will eventually converge to the customer growth rate over time. This means that positive NRR is similar to having a higher average customer value rather than a higher growth rate. The core observation remains valid even when considering realities like slowed customer growth and stopped expansion compounding. Despite the title, positive NRR is beneficial for companies as it leads to more revenue and value, but the growth rate is still primarily determined by the number of customers.

Company
Fivetran

Date published
Oct. 7, 2022

Author(s)
George Fraser

Word count
629

Hacker News points
13

Language
English


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