Somewhere between your Series A and your Series B, the revenue question changes. Early on, investors want to know what you are earning right now. Later, they want to know what you have already locked in. The moment a partner asks for your "committed ARR" or a lender asks for your "backlog," most founders reach for the same live ARR number they have always reported, and it is the wrong answer. It understates the business, or occasionally overstates it, and it signals that the finance function has not caught up to the stage.
These forward-looking revenue metrics, CARR, revenue backlog, and RPO, describe money that is contracted but not yet flowing. They are the numbers that show durability: how much of next year's revenue is already signed, how much is at risk, and how reliable your forecast really is. This guide defines each one precisely, shows how to compute them, explains how they overlap and where they diverge, and clarifies which number to put in front of which audience.
The Short Answer
ARR is your live, active run-rate: the annualized recurring revenue from customers who are up and running today. CARR (Committed or Contracted ARR) adds the deals you have signed but not yet turned on, plus the future steps of contracts that ramp over time. Revenue backlog is total contracted revenue you have not yet recognized, including multi-year commitments. RPO (Remaining Performance Obligations) is the formal ASC 606 version of backlog: deferred revenue plus the unbilled contracted amounts you are still obligated to deliver.
They answer four different questions. ARR asks what is live now. CARR asks what have we won. Backlog and RPO ask how much contracted revenue is still ahead of us. The metrics overlap heavily, which is exactly why founders confuse them, and why presenting the wrong one at the wrong moment undermines an otherwise clean data room.
ARR: The Live Run-Rate
Annual Recurring Revenue is the annualized value of the recurring subscriptions that are active and generating revenue today. If a customer is paying $2,000 per month for a live subscription, that contributes $24,000 to ARR. Sum every active recurring subscription, annualize, and you have ARR.
The defining word is active. ARR counts revenue that is currently switched on. It excludes one-time fees (implementation, professional services, hardware), and in a strict definition it excludes a deal you signed last week that does not go live until next quarter. That exclusion is the whole reason CARR exists.
ARR is the anchor metric for a Series A raise, and it is where most benchmark conversations start. If you are calibrating where your ARR should sit at that stage, see our Series A ARR benchmarks. But ARR has a blind spot: it is silent about everything you have won that has not turned on yet. For a business closing large deals with long onboarding cycles, that blind spot can be a material fraction of the company.
CARR: Committed or Contracted ARR
CARR captures the recurring revenue you have contractually secured, whether or not it is live. Start from ARR and add:
- Signed-but-not-yet-live deals. A contract is executed, but the customer is still in onboarding or implementation. The revenue is committed; it just has not started flowing.
- The future steps of ramping deals. Many enterprise contracts start small and step up on a schedule: $100,000 in year one, $200,000 in year two. CARR reflects the committed contractual run-rate, not only the current step.
A clean way to think about it: ARR is what you are billing on today, CARR is what you will be billing on once every signed contract is fully deployed and ramped. CARR is always greater than or equal to ARR, and the gap between them, sometimes called the committed-but-not-live bucket, is itself a useful number. A healthy gap says you have a loaded pipeline of won business converting to live revenue. A gap that never converts says you have an onboarding or activation problem hiding behind an impressive bookings figure.
Two cautions on definitions. First, "Committed ARR" and "Contracted ARR" are often used interchangeably, but some teams draw a line: Contracted ARR means a signed contract exists, while Committed ARR is sometimes stretched to include verbal commitments or deals in final procurement. Only the signed version belongs in a data room. Second, CARR should include only recurring commitments. A signed one-time services engagement is real revenue, but it is not recurring and does not belong in any ARR-family metric.
Revenue Backlog: Contracted Revenue Not Yet Recognized
Where CARR is a run-rate (an annualized rate of recurring revenue), backlog is a stock: the total dollar value of contracted revenue you have not yet recognized as of a point in time.
If you sign a three-year, $360,000 contract ($10,000 per month) and you are six months in, you have recognized $60,000 and your remaining backlog on that contract is $300,000. Backlog sums that remaining contracted value across every active contract. It includes the full remaining term of multi-year deals, which is why backlog for a company selling long contracts can dwarf its annual ARR.
Backlog answers a question neither ARR nor CARR answers directly: over the entire remaining life of what we have signed, how much revenue is still coming? That is precisely the question a lender underwriting against your contracts wants answered, and it is why backlog shows up constantly in venture debt conversations. Backlog is the raw contractual promise. It is the foundation, and RPO is its accounting-grade expression.
RPO: Remaining Performance Obligations
RPO is the ASC 606 disclosure that formalizes backlog. Under the revenue-recognition standard, a performance obligation is a promise to deliver a good or service to a customer. RPO is the total transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the reporting date. In plainer terms, it is the contracted revenue you have promised but not yet delivered.
The clean way to compute RPO is:
RPO = Deferred Revenue + Unbilled Contracted Amounts
- Deferred revenue is money you have already billed or collected but not yet earned. A customer prepaid a year up front in January; by June, half of that sits on the balance sheet as deferred revenue, a liability you discharge by delivering the service.
- Unbilled contracted amounts are the committed revenue you have not yet billed: the later months and years of a signed contract that you will invoice in the future. This is the piece that pure deferred revenue misses.
Add them and you get the full remaining obligation, the billed-but-unearned plus the unbilled-but-committed. RPO is frequently split into current RPO (cRPO), the portion expected to be recognized within twelve months, and long-term RPO, everything beyond. cRPO is one of the most-watched forward indicators for public SaaS companies because it is a near-term revenue signal that is harder to manipulate than a pipeline forecast.
For the mechanics of how contracts move through deferred revenue into recognized revenue, and why the timing rarely matches your cash, see our guide to SaaS revenue recognition under ASC 606.
How They Relate: A Venn View
These four metrics are not four separate measurements of four separate things. They are overlapping views of one underlying reality, your signed contracts, sliced along two axes: recurring versus total, and run-rate versus remaining balance.
Picture your contracts as a set of overlapping circles:
- ARR is the innermost slice: only what is live and recurring, expressed as an annual rate.
- CARR widens that circle to include signed-but-not-live and the unramped steps of live deals. Still a run-rate, still recurring only, but forward of the live line.
- Revenue backlog switches from run-rate to remaining balance. It is the total unrecognized contracted value, and because it spans full multi-year terms, it captures duration that a run-rate never shows.
- RPO is backlog rendered under ASC 606, expressed as deferred revenue plus unbilled contracted amounts, and reported on a formal basis auditors will stand behind.
The most important distinctions to hold onto: ARR and CARR are rates (dollars per year), while backlog and RPO are balances (total dollars remaining). CARR is recurring only, while RPO under ASC 606 can include the remaining value of contracted non-recurring obligations too, so RPO and CARR are not the same number even when they feel adjacent. And RPO generally will not equal a naive "sum of contract values remaining," because it follows specific rules about which optional and cancelable amounts get included.
A Worked Example
Take a company with three customers, valued as of June 30.
Customer A: Live subscription at $10,000 per month, on an annual contract that started April 1. Fully deployed.
Customer B: Signed a $240,000 annual contract on June 1 ($20,000 per month), but implementation is not complete and the service goes live August 1. Nothing is live or billed yet.
Customer C: Signed a three-year contract on January 1. It ramps: $5,000 per month in year one, $10,000 in year two, $15,000 in year three. Currently live at the year-one rate. Billed monthly.
Now compute each metric as of June 30.
ARR counts only what is live and recurring, at the current rate. Customer A: $120,000. Customer B: $0 (not live). Customer C: $60,000 (current $5,000 per month step). ARR = $180,000.
CARR adds signed-but-not-live and the fully ramped run-rate of committed contracts. Customer A: $120,000. Customer B: $240,000 (signed, committed, live in five weeks). Customer C at its fully ramped step: $180,000 ($15,000 per month). CARR = $540,000. The gap between ARR and CARR, $360,000, is real committed revenue that today's ARR is blind to.
Revenue backlog sums remaining contracted value across full terms. Customer A: 9 months remaining at $10,000, so $90,000. Customer B: full $240,000 (none delivered). Customer C: 30 months remaining, being $60,000 for the rest of year one (6 months at $5,000), $120,000 in year two, $180,000 in year three, so $360,000. Backlog = $690,000.
RPO is the ASC 606 expression of that backlog: deferred revenue plus unbilled contracted amounts. If Customer A prepaid annually, roughly $90,000 sits in deferred revenue for the unearned nine months; Customers B and C are billed as they go, so their remaining commitments are unbilled contracted amounts ($240,000 and $360,000). RPO = about $690,000, split into current RPO (the portion landing in the next twelve months) and long-term RPO (Customer C's later years).
One company, one set of contracts, four numbers ranging from $180,000 to $690,000. Present the right one to the right audience and the picture is honest. Present ARR alone to a lender and you have understated your collateral by nearly four times.
Comparison Table
| Metric | What it measures | Type | Includes non-recurring? | Formula / basis | Best audience |
|---|---|---|---|---|---|
| ARR | Live, active recurring run-rate | Rate ($/yr) | No | Sum of active recurring subscriptions, annualized | Series A investors, board run-rate |
| CARR | Committed recurring run-rate, incl. signed-not-live and full ramp | Rate ($/yr) | No | ARR + signed-not-live + unramped contract steps | Series B+ growth investors |
| Revenue backlog | Total contracted revenue not yet recognized | Balance ($) | Often yes | Sum of remaining contracted value across full terms | Venture-debt lenders, acquirers |
| RPO | Unsatisfied performance obligations under ASC 606 | Balance ($) | Yes | Deferred revenue + unbilled contracted amounts | Lenders, auditors, late-stage / pre-IPO diligence |
Why These Metrics Matter
Series B and later diligence. By the growth stage, a live ARR number is table stakes, and sophisticated investors treat it as the floor, not the story. They want to see how much of your forward revenue is already contracted, because that is the difference between a company that has to sell its entire next year from scratch and one that starts the year most of the way to plan. CARR and backlog quantify momentum that ARR alone hides. Showing them, correctly and reconciled, signals a finance function that operates at the company's stage.
Venture-debt lenders and covenants. Lenders underwrite against contracted, durable revenue, not hopeful pipeline. Backlog and RPO are close to their native language: they describe cash the business is contractually owed. Debt covenants are frequently written against these forward metrics (minimum ARR, minimum contracted revenue, sometimes RPO-linked tests), so if you cannot produce and defend them, you cannot borrow against them, and you may trip a covenant you did not know how to track. Understanding these numbers is a prerequisite for the venture debt conversation.
Forecasting reliability. The share of next year's revenue that is already contracted is the single best input to a credible forecast. A plan built on 70 percent already-contracted revenue is a fundamentally different risk profile from one built on 20 percent contracted and 80 percent to-be-sold. Investors reverse-engineer your forecast quality from exactly this ratio.
Durability of revenue. Multi-year backlog and long-term RPO demonstrate that customers commit for the long haul, which speaks to retention, switching costs, and pricing power all at once. A large long-term RPO is one of the strongest available signals that revenue will persist.
When to Present Which Number
- Reporting current performance to your board or a Series A investor: lead with ARR. It is the honest, live run-rate and the metric everyone benchmarks against.
- Raising a Series B or growth round: present ARR and CARR together, and explicitly show the bridge between them. The committed-but-not-live gap is a selling point when it converts reliably, so show your historical conversion of CARR to ARR to prove it does.
- Talking to a venture-debt lender or an acquirer: backlog and RPO are what they want, because they describe contracted revenue over its full remaining life. Have current RPO and long-term RPO split out.
- Late-stage or pre-IPO diligence and audits: RPO on a formal ASC 606 basis, reconciled to deferred revenue and your bookings. This is where informal backlog math will not survive scrutiny.
The unifying rule: never present just one number as if it were the whole truth, and always be able to reconcile them to each other. The fastest way to lose credibility is to show a CARR figure that does not tie to your backlog, or an RPO that does not reconcile to your deferred-revenue balance.
Common Mistakes
Counting pilots, LOIs, and verbal commitments as committed. A letter of intent is not a signed contract, and a paid pilot with no commitment beyond the pilot is not recurring. Only executed, binding, recurring contracts belong in CARR. Inflating CARR with soft commitments is one of the red flags investors find in your data room, and it is easy to catch: diligence will ask to see the contracts.
Double-counting across metrics. The same contract lives in several metrics at once, but in different forms (a run-rate in CARR, a remaining balance in backlog). Founders sometimes add a deal into ARR and into the committed bucket of CARR, counting live revenue twice, or sum backlog on top of CARR as though they were additive. They are different views of the same contracts, not separate pools of revenue.
Ignoring ramp. Reporting a ramping contract at its final-year rate as though it were live today overstates ARR. Reporting it only at its current step in CARR understates the commitment. The discipline is to put the live step in ARR and the fully ramped, committed run-rate in CARR, and to be explicit about which is which.
Treating RPO as a simple sum of contract values. ASC 606 has specific rules about which cancelable and optional amounts get included in RPO, and about contracts with original durations of one year or less. A naive "add up everything remaining" figure will not match a proper RPO disclosure, and an auditor will notice.
Confusing bookings, backlog, and recognized revenue. Bookings is what you signed this period, backlog is what remains to be recognized, and recognized revenue is what has hit the income statement. Founders under pressure sometimes blur these into one impressive-sounding number. Diligence separates them immediately, and the blur reads as either confusion or spin.
Mixing recurring and non-recurring. Implementation fees, professional services, and hardware are real revenue, but they are not recurring and must be excluded from any ARR-family metric. They can legitimately appear in backlog and RPO, which is another reason those two numbers exceed CARR. Keep the components labeled.
What We Recommend
- Instrument all four now, not the week before diligence. Build ARR, CARR, backlog, and RPO from the same contract-level source of truth so they always reconcile. Retrofitting them from spreadsheets during a raise is where the double-counting creeps in.
- Track the CARR-to-ARR conversion history. The rate at which committed deals go live, and how long it takes, is a metric in its own right and a powerful proof point in a growth round.
- Split RPO into current and long-term and reconcile it to your deferred-revenue balance every close, so the number is audit-ready before an auditor ever asks.
- Keep a contract register that ties every metric back to executed agreements, with signed dates, terms, ramp schedules, and recurring-versus-one-time flags. This is the artifact that makes all four numbers defensible.
Forward-looking revenue metrics are where a startup finance function either demonstrates it has grown into the company's stage or reveals that it has not. Getting CARR, backlog, and RPO right, reconciled, defensible, and matched to the right audience, is exactly the kind of work that separates a smooth Series B or debt raise from a painful one. If you want help building these metrics from your contracts so they hold up in diligence, book a free consultation and we will walk through your specific revenue base.
For a visual, board-ready summary of these four metrics and how they fit together, see the companion slides.
This article is general information, not accounting or legal advice. Revenue-recognition and disclosure treatment is fact-specific; confirm your situation with a qualified advisor before acting.
