Based on the provided context, it appears "NDR" refers to Net Dollar Retention (NDR), which is a key performance indicator (KPI) used to measure the amount of recurring revenue retained from existing customers. It's also sometimes called Net Revenue Retention (NRR).
Essentially, NDR tracks how well a company retains and grows revenue from its existing customer base over a specific period (e.g., annually). It accounts for revenue gained through upgrades, add-ons, and cross-selling, while also factoring in revenue lost due to downgrades and customer churn.
Why is NDR Important?
A high NDR indicates:
- Strong Customer Satisfaction: Customers are happy with the product or service and continue to use it.
- Effective Upselling & Cross-selling: The company is successful in expanding its revenue from existing customers.
- Sustainable Growth: A healthy NDR contributes to predictable and sustainable revenue growth. It's generally cheaper to retain and grow existing customers than acquire new ones.
- Product-Market Fit: A strong NDR suggests the product or service continues to meet customer needs effectively.
How is NDR Calculated?
The general formula for NDR is:
NDR = [(Revenue at the beginning of the period + Upgrades + Cross-sells) - (Downgrades + Churn)] / Revenue at the beginning of the period
Or, more concisely:
NDR = (Revenue Retained from Existing Customers in the Period) / (Revenue at the Beginning of the Period)
The result is usually expressed as a percentage. For example, an NDR of 120% means that the company grew its revenue from existing customers by 20% during the period.
Example:
Let's say a SaaS company has $1 million in recurring revenue at the beginning of the year. Throughout the year:
- It gains $200,000 in revenue from upsells and cross-sells to existing customers.
- It loses $50,000 in revenue from downgrades.
- It loses $50,000 in revenue from churned customers.
The NDR would be:
NDR = ($1,000,000 + $200,000 - $50,000 - $50,000) / $1,000,000 = $1,100,000 / $1,000,000 = 1.10
Therefore, the NDR is 110%.
What is a "Good" NDR?
Generally, an NDR above 100% is considered good, as it indicates that the company is growing its revenue from its existing customer base. A rate significantly above 100% (e.g., 120% or higher) is often seen in high-growth SaaS companies. However, the ideal NDR can vary depending on the industry and the company's stage of growth.
Therefore, "NDR Bank" isn't a standard term, and it is probably meant to refer to the Net Dollar Retention rate in this context.
