Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! A Note on Net Retention Anyone who follows this blog knows net retention is my favorite software metric. However, it’s very important to read the footnotes to see how each company calculates this metric to truly appreciate its value. Since it’s a Non-GAAP metric, there is no standard definition. An excellent case study on some of the different definitions is Fastly. They report both a Dollar Based Net Retention (DBNR) as well as a Net Revenue Retention (NRR). Their DBNR is 126% (looks great!) while their NRR is 93% (not so great…). The difference between their DBNR and NRR is that DBNR (as Fastly defines it) does NOT include churn. The calculation takes the revenue from a set of customers today (who are active) and compares it to that same groups revenue 1 year ago. On the other hand, NRR is inclusive of churn. Most companies do not report DBNR the way Fastly does, however it’s important to read the footnotes for each company to be sure. Here’s the definition of DBNR from Fastly:
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