How To Calculate Net Revenue Retention in Workday | Arithmix

Calculating net revenue retention is an important metric for any business. It helps you understand how much revenue you are retaining from your existing customers, which is crucial for long-term growth and success. In this article, we will discuss what net revenue retention is, when it is valuable to calculate, and how to calculate it.

What Is Net Revenue Retention?

Net revenue retention is a metric that measures the percentage of revenue a company retains from its existing customers over a given period of time. It takes into account the revenue lost from customers who churned or cancelled their subscriptions, as well as the revenue gained from upsells and cross-sells to existing customers.

For example, if a company had $1 million in revenue from existing customers at the beginning of the year, and $900,000 in revenue from those same customers at the end of the year (after accounting for churn and upsells), the net revenue retention rate would be 90%.

Net revenue retention is a valuable metric because it helps you understand how much revenue you are retaining from your existing customers. This is important because it is typically more cost-effective to retain existing customers than to acquire new ones. Additionally, a high net revenue retention rate is a good indicator of customer satisfaction and loyalty.

When Is It Valuable To Calculate Net Revenue Retention?

Net revenue retention is valuable to calculate for any business that relies on recurring revenue from customers. This includes subscription-based businesses, SaaS companies, and any business that has a high customer lifetime value.

Calculating net revenue retention can help you identify areas where you can improve customer retention and increase revenue. For example, if you have a low net revenue retention rate, it may indicate that you need to improve your customer support or product offerings to better meet the needs of your customers.

How To Calculate Net Revenue Retention

Calculating net revenue retention involves three steps:

1. Calculate the revenue from existing customers at the beginning of the period (A).
2. Calculate the revenue from those same customers at the end of the period, after accounting for churn and upsells (B).
3. Divide B by A to get the net revenue retention rate.

Here is the formula:

Net Revenue Retention Rate = (B / A) x 100%

For example, if your revenue from existing customers at the beginning of the year was $1 million, and your revenue from those same customers at the end of the year (after accounting for churn and upsells) was $1.1 million, the net revenue retention rate would be:

Net Revenue Retention Rate = ($1.1 million / $1 million) x 100% = 110%

A net revenue retention rate of over 100% indicates that you are not only retaining all of your existing customers, but also generating additional revenue from upsells and cross-sells.

In conclusion, calculating net revenue retention is an important metric for any business that relies on recurring revenue from customers. It helps you understand how much revenue you are retaining from your existing customers, which is crucial for long-term growth and success. By following the steps outlined in this article, you can easily calculate your net revenue retention rate and use it to identify areas for improvement and growth.

How Do You Calculate Net Revenue Retention in Workday

Workday itself isn’t naturally geared towards letting you calculate complex metrics like Net Revenue Retention. As an alternative, teams typically use products like Arithmix to import data from Workday and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Workday, combine it with data from other systems, and create calculations like Net Revenue Retention.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Net Revenue Retention in Arithmix

Calculating metrics like Net Revenue Retention is simple in Arithmix. Once you've created your free account, you’ll be able to import your Workday data, and use it to create natural language formulas for metrics like Net Revenue Retention.

Arithmix is designed to give you the power to build any calculations you want on top of your Workday data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.