Starting Contracted Annual Recurring Revenue
The contracted annual recurring revenue balance carried forward from the prior period — your opening CARR for the month.
◆ Currency
Formula
Built from
What it measures
Starting CARR is the opening balance for your period — the previous month's Closing CARR carried forward, unchanged. It is the annualized run-rate of every signed contract (live or not yet activated) as of the prior period's close, and it serves as the fixed baseline against which you measure new bookings, expansions, contractions, and churn during the current period. It is not recomputed from live contracts; it is a direct reference to where last month's signed book of business ended.
Why it matters
You need a clean opening position because CARR movement only makes sense in context. Finance reads Starting CARR to anchor the bridge from prior month to current month — it is the leftmost bar of the bookings waterfall. Sales uses it to set new-bookings and expansion targets against a known signed base. Investors look at whether the denominator for your CARR growth-rate calculation is stable or volatile, since a noisy opening balance makes every downstream growth number untrustworthy. Because CARR includes signed-but-not-live contracts, Starting CARR is also the leading indicator that sits one step ahead of your opening live ARR.
How to read it
Starting CARR should be identical to the previous month's Closing CARR — no restatement, no catch-up. If the two numbers disagree, you have a data integrity issue, not a business event. Compare Starting CARR month-to-month to see if your contracted base is growing (good — last month's new bookings and expansion outran churn) or shrinking (last month churned and downsold more than it signed). Always pair it with month-end Closing CARR to read the *motion*: started at $1M, ended at $1.25M means +25% month-on-month. On its own, Starting CARR tells you almost nothing — its value is as the anchor for everything that moves on top of it.
What good looks like
Good
Starting CARR grows every month because prior periods' net-new bookings and expansion consistently outpaced churn and downgrades.
Watch
Starting CARR is flat or cycling month to month — a sign last period's bookings activity stalled or new deals were roughly offset by churn and downsells.
Bad
Starting CARR is shrinking month-on-month, meaning the prior period's churn and downgrades overwhelmed new and expansion bookings.
Watch-outs
- Not locking it to the prior period's Closing CARR. Starting CARR must equal last month's ending balance exactly; any gap means the waterfall no longer reconciles and bookings math is built on sand.
- Restating or adjusting it after the period has begun. Once the prior period closes, Starting CARR is frozen — corrections belong in the prior period's Closing CARR and only then flow forward.
- Confusing it with Closing CARR or the month's net-new bookings. It is neither an ending balance nor a measure of motion — it is purely a carry-forward of where you started.
- Letting timing leakage contaminate it. A contract signed on day one of the new month is New CARR, not Starting CARR; one that churns on the last day of the prior month is already excluded — misclassifying either inflates or deflates the opening base.
Worked example
Hypothetical
If June closed with $1M CARR, July opens with $1M Starting CARR. During July you sign $300K of new contracts, existing customers expand by $50K annualized, one downsells by $20K, and one churns for $80K — ending July at $1.25M, which becomes August's Starting CARR.