The NRR Formula
NRR = (Beginning ARR + Expansion - Churn) / Beginning ARR
Example: start with £1m. Add £300k expansion. Lose £100k to churn. NRR = (£1m + £300k − £100k) / £1m = 120%
NRR compounds, which is why it is the number to watch. A business holding 120% grows off its existing base before a single new logo is signed. A business at 90% has to sell that gap back every year before it grows at all.