Contracted Annual Recurring Revenue
The annualized recurring revenue locked into all signed customer contracts, whether or not each contract has gone live yet.
◆ Currency
Formula
Built from
What it measures
The sum of every signed contract's annualized recurring value as of a point in time, including deals that have closed but not yet started billing. One-time fees, services, and usage overages are excluded — only the committed annual run-rate counts.
Why it matters
CARR is your forward-looking revenue visibility. Bookings signed today become recognized revenue later, so CARR tells leadership "how much have we locked in?" before implementation, activation, or usage variability play out. Sales forecasts off it, Finance plans cash and renewals off it, and the gap between CARR and live ARR sizes your onboarding backlog.
How to read it
Read CARR as a trend, not a snapshot, and always against live ARR. Month-over-month growth means new bookings and expansion are outrunning churn and downsells; flat or negative movement means the leaks are larger than the inflows and is a leading indicator of future revenue trouble. The CARR-minus-ARR gap is your signed-but-not-live revenue — a healthy backlog if it activates quickly, a delivery problem if it sits there. Break CARR into its waterfall components to diagnose *why* it moved.
What good looks like
Good
CARR climbing month over month, driven by new bookings and expansion outrunning churn, with the gap to live ARR shrinking as signed contracts activate.
Watch
CARR growth flat or carried by a single large booking; the signed-but-not-live gap widening because onboarding is stalling activation.
Bad
CARR declining as churn and downsells exceed new bookings and upsell; a cliff of contract expirations looming next period.
Watch-outs
- Confusing CARR with cash in the bank. CARR is contractually committed, not yet collected — a big CARR jump can sit alongside weak cash flow if customers are on long payment terms or annual upfront billing hasn't been invoiced.
- Booking annual or multi-year contracts at full TCV. A 2-year, $240K deal is $120K of CARR, not $240K — always annualize to a one-year run-rate or CARR will spike on signing and overstate the business.
- Ignoring the waterfall. Flat total CARR can hide a crisis: $300K of new bookings offset by $300K of churn means a completely unstable base. Always read New, Upsell, Downsell, and Churned CARR separately.
- Forgetting contract end dates. CARR implicitly assumes renewal — a cliff of expirations next quarter makes CARR look healthy while actual renewability is poor.
Worked example
Hypothetical
Open April at $1M CARR. You sign a $300K annual contract, an existing customer expands by $50K annualized, one downsells by $20K, and one churns for $80K. Closing CARR is $1.25M.
Variants & windows
The same metric re-expressed by a mechanical transform — a trailing window, a growth rate, a per-unit scaling, or a book/segment cut. Each is computed from Contracted Annual Recurring Revenue above.
- CARR T3M Growth Rate Growth rate · Trailing 3-month
- CARR TTM Growth Rate Growth rate · Trailing 12-month