Churned Contracted Annual Recurring Revenue

What it measures

The sum of the annualized value of every signed customer contract that was fully canceled this period, removing it from your Contracted ARR base. Counts logo-level cancellations of contracted agreements — whether the contract was already live or signed but not yet activated. Excluded: downsells and partial amendments (only the lost portion would belong in Downsell ARR), contract pauses, and one-time revenue. Only a full cancellation that eliminates the entire signed agreement counts.

Why it matters

Churned CARR is the bleak in your contracted book of business — every dollar of signed, annualized revenue that walked out the door this period. Finance and sales ops watch it closely because it directly erodes forecast accuracy and committed cash: if you signed $1M of CARR but $150K cancels, your real contracted base grew by $850K, not $1M. Boards read it as a quality signal — rising Churned CARR alongside flat New CARR means you are closing deals that don't stick, whether from buyer regret, weak qualification, delivery risk, or a softening market. Because CARR includes contracts that are signed but not yet live, Churned CARR often surfaces trouble earlier than Churned ARR — a cancellation can show up before the customer ever generates a dollar of recognized revenue.

How to read it

Read Churned CARR as a ratio against New CARR and as a trend, never as a raw dollar figure in isolation. A spike has several possible causes, so decompose before you react: did a single large logo cancel (concentration risk), did you overpromise on delivery timelines (operations risk), or did several buyers cancel at once after a market shift (macro risk)? Slice by segment and by signing cohort — are all tiers churning or just one, and are deals signed in a particular month canceling more than others? Then plot the series month over month. Because some canceled contracts had not yet activated, rising Churned CARR is frequently a leading indicator that Churned ARR will climb 30–90 days later as those contracts would have gone live.

What good looks like

Watch-outs

• Conflating Churned CARR with Churned ARR. Churned CARR removes a canceled contract from your contracted base (live or not yet activated); Churned ARR removes only recognized revenue from contracts that were already active. They measure retention loss at different stages.
• Counting amendments as churn. A customer who renegotiates terms, pushes out a start date, or partially reduces a signed deal is an amendment or a downsell — not a churn event. Only a full cancellation that eliminates the entire agreement counts.
• Prorating the canceled amount. Churned CARR is recorded at full annualized contract value on the cancellation date, regardless of how long the contract was live. Prorating understates the loss to your contracted base.
• Double-counting against Churned ARR. If a not-yet-live contract cancels, count it once in Churned CARR. Counting the same logo again later in Churned ARR (because you assumed it would have activated) overstates total churn.

Worked example