Learn how net expansion from existing customers can offset losses and push retention above 100%. Master the formulas and concepts behind net revenue retention and negative churn.
Negative churn occurs when net revenue retention (NRR) is ______.
greater than 100%
exactly 100%
undefined without new logos
less than 100%
Which formula correctly computes NRR for a period?
(Starting MRR + New Logo MRR) ÷ Starting MRR
(Starting MRR + Expansion − Contraction − Churn) ÷ Starting MRR
(Expansion + New Logo MRR) ÷ Starting MRR
(Ending MRR − New Logo MRR) ÷ Ending MRR
Which metric excludes expansion revenue by design?
Gross revenue retention (GRR)
Average revenue per user (ARPU)
Customer acquisition cost (CAC)
Net revenue retention (NRR)
In NRR, expansion revenue typically includes ______.
upsells and cross‑sells to existing customers
new logo bookings
capitalized implementation fees
marketing rebates and refunds
A company can report negative churn even if some customers cancel when ______.
ARPU declines but signups rise
cash burn is negative
expansion from remaining customers exceeds losses from churn and downgrades
new customer growth offsets churn
Which item should be EXCLUDED from the numerator when computing NRR?
upsell revenue
price increases to existing customers
new logo revenue
cross‑sell revenue
Net expansion rate is most commonly defined as ______.
(New Logos − Churned MRR) ÷ Ending MRR
Ending MRR ÷ Starting MRR
(Expansion − Contraction) ÷ Starting MRR
(Expansion + New Logos) ÷ Ending MRR
Which statement about negative churn and CLV is most accurate?
Sustained negative churn raises CLV by increasing expected future revenue per retained account.
Negative churn lowers contribution margin by definition
Negative churn depends on acquisition channel mix
Negative churn requires zero cancellations
In practice, which revenue movement counts as CONTRACTION rather than churn?
additional seat purchases
price increases after renewal
downgrades that reduce recurring revenue but keep the account active
complete cancellation of service
If starting MRR is $1,000 and you have $120 expansion, $30 contraction, and $50 churn, what is NRR?
110%
100%
96%
104%
Starter
Good start—review definitions and formulas, then retake the quiz.
Solid
Nice work—tighten the gray areas to turn insights into action.
Expert!
Outstanding—you can apply these concepts to real revenue decisions.
