Contracted ARR is the total annual recurring revenue committed through signed contracts, including deals where billing starts at a future date. It reflects what has been sold and agreed to, not what is currently active or recognized.
At a glance
- Counts revenue at contract signature, before billing begins.
- Used by finance, sales leadership, and boards to forecast near-term revenue.
- Always higher than Live ARR when future-dated enterprise deals are in play.
- Signed order forms or MSAs are the minimum threshold. Letters of intent do not count.
- New logo and expansion ARR should be tracked separately within the total.
How does Contracted ARR differ from Live ARR?
When a customer signs a 12-month contract worth $60,000 starting 45 days from now, that $60,000 counts toward Contracted ARR immediately. It does not count toward Live ARR or recognized revenue until the contract start date passes.
A SaaS company can report $4M in Contracted ARR while only $3.2M is active and billing. That $800K gap typically represents future-dated starts from enterprise deals requiring longer implementation windows or fiscal-year-aligned start dates.
Why does it matter for revenue and finance teams?
Contracted ARR gives leadership a cleaner forward view than pipeline does. Pipeline carries probability weightings and human optimism. Contracted ARR carries a signature.
For a CFO modeling 90-day cash flow, knowing that $400K in contracts are signed but do not start billing until next quarter changes headcount and spend decisions. For a head of revenue tracking quota attainment, reps often receive credit at contract signature rather than billing start, and misaligning those two creates compensation disputes and forecasting noise.
What are the most common mistakes?
Treating it as collected cash
A signed contract is a legal commitment, not collected revenue. Customers cancel, go bankrupt, or invoke termination-for-convenience clauses. Counting future-dated ARR in cash flow models without a discount factor is optimistic at best.
Mixing new logo and expansion ARR
A $1.2M renewal with a $200K uplift looks identical to a net-new $1.2M contract in a raw total. Keeping those buckets separate is the only way to see where growth is actually coming from.
Logging pre-signature commitments
Letters of intent and verbal agreements are not contracted. A signed order form or master service agreement is the hard threshold. Teams that blur this line inflate their numbers and then scramble to explain the gap when billing never materializes.
How does it connect to other SaaS metrics?
Contracted ARR feeds directly into Annual Recurring Revenue calculations once contract start dates pass. It pairs well with CAC Payback Period analysis because payback can be modeled against committed revenue rather than waiting for billing to begin.
Boards commonly review Contracted ARR growth alongside Churn Rate to get an early read on net revenue retention trajectory before the numbers surface in live billing data. For enterprise teams, tracking Contracted ARR by account tier also signals where to concentrate post-sale resources before a contract goes live.