What is Contracted ARR?

Contracted ARR (CARR) is the annual recurring revenue a company has signed contracts for, including deals that haven’t gone live or started billing yet, minus customers who have already given notice that they won’t renew.

At a glance

• Contracted ARR meaning: recurring revenue that’s contractually committed, whether or not it’s live. Some finance teams call it committed ARR.
• Formula: CARR = current ARR + signed contracts not yet live (annualized) minus churn notices received.
• The SaaS Metrics Standards Board defines it as contracted annual recurring revenue “whether in production or not yet in production”.
• CARR is usually higher than ARR, because signed deals often go live weeks or months after signature.
• It’s most useful where implementations are long, as in enterprise software.

How contracted ARR works

ARR counts subscriptions that are live today. That’s the right number for what the business earns now, but it lags what the sales team has already closed. If a $120,000 annual contract is signed in March and goes live in June, it’s in CARR from March and in ARR from June.

CARR also moves the other way faster. When a customer sends a non-renewal notice, the contract may still be active for months, so ARR doesn’t drop yet. CARR subtracts it as soon as the notice arrives. That makes it a more honest forward view than ARR alone, as long as both sides of the adjustment are applied.

Example (illustrative): a company has $3.2M of live ARR. It has signed $600,000 of annual contracts that start next quarter, and two customers worth $150,000 combined have said they won’t renew in the summer. CARR is $3.2M + $600,000 minus $150,000, or $3.65M. The $600,000 waiting to go live is the onboarding team’s work for next quarter, and the $150,000 is the customer team’s warning about the summer.

Common contracted ARR mistakes

• Adding signed deals but ignoring churn notices. That inflates the number in exactly the way investors check for.
• Counting deals that aren’t really signed. A verbal yes or a deal in legal review is pipeline, not CARR.
• Mixing one-time fees in. Implementation and setup fees aren’t recurring, so they stay out.
• Reporting CARR without ARR next to it. The gap between them is the useful part, because it shows how much signed revenue still has to go live.
• Letting the gap sit. A big, growing gap usually means onboarding is the constraint, not sales.

How contracted ARR shows up in a revenue system

CARR depends on clean deal data: signature dates, go-live dates, contract values and renewal notices recorded the same way every time in the CRM. Getting those fields and reports right is part of the RevOps work we run inside partners’ systems. See how we run RevOps.

Terms that sit next to contracted ARR

CARR is built from annual contract value on signed deals and from ARR, and it’s sometimes tracked monthly next to MRR. The churn notices it subtracts feed churn rate, and the signed expansions it adds show up later as expansion revenue.