What is Negative Churn?
Definition
A situation where expansion revenue from existing subscribers exceeds the revenue lost from cancellations and downgrades.
Understanding Negative Churn
Negative churn is the gold standard for subscription businesses. It means the existing customer base is growing in value even without adding new subscribers. This happens when upgrades, add-ons, and usage increases outpace cancellations.
Companies achieving negative churn (like Slack, Twilio, and Datadog) can grow revenue indefinitely from their current customer base. Net revenue retention above 100% indicates negative churn. For consumers, services with negative churn are likely stable and investing in product improvements, making them safer long-term subscription choices.
Related Terms
Net Revenue Retention
A metric measuring the percentage of recurring revenue retained from existing customers, including expansions, contractions, and churn.
Expansion Revenue
Additional revenue generated from existing subscribers through upgrades, add-ons, or increased usage beyond their initial plan.
Churn Rate
The percentage of subscribers who cancel their subscription during a given time period, typically measured monthly or annually.
MRR
Monthly Recurring Revenue — the predictable total revenue a subscription business expects to earn each month from all active subscriptions.