Committed Annual Recurring Revenue
Growth
Industry:
SaaS
Short Definition
Contracted Annual Recurring Revenue (CARR) is a forward-looking metric that represents the total, annualized, recurring revenue a company is contractually obligated to receive. It is a measure of committed future earnings that tells you the maximum size of your recurring revenue base over the next twelve months.
Short Definition
Contracted Annual Recurring Revenue (CARR) is a forward-looking metric that represents the total, annualized, recurring revenue a company is contractually obligated to receive. It is a measure of committed future earnings that tells you the maximum size of your recurring revenue base over the next twelve months.
Short Definition
Contracted Annual Recurring Revenue (CARR) is a forward-looking metric that represents the total, annualized, recurring revenue a company is contractually obligated to receive. It is a measure of committed future earnings that tells you the maximum size of your recurring revenue base over the next twelve months.
Why it matters for Investors
Forward visibility: Clear line-of-sight to next periods’ ARR.
Sales momentum: Shows what the team has already contracted.
Risk early-warning: Future down-sells/cancels lower CARR before they hit ARR.
Why it matters for Investors
Forward visibility: Clear line-of-sight to next periods’ ARR.
Sales momentum: Shows what the team has already contracted.
Risk early-warning: Future down-sells/cancels lower CARR before they hit ARR.
Why it matters for Investors
Forward visibility: Clear line-of-sight to next periods’ ARR.
Sales momentum: Shows what the team has already contracted.
Risk early-warning: Future down-sells/cancels lower CARR before they hit ARR.
Formula
CARR (Contracted/Committed ARR) = the ARR you’d have today if every signed future-dated change were already live (live ARR + signed future increases − signed future decreases).
Practical considerations:
Signed only: Include fully executed contracts/order forms; exclude pipeline/intent.
Snapshot timing: Use signature date to enter items into CARR; they leave CARR and hit ARR on the effective (go-live/end) date.
Scope: Annualized recurring value only; exclude one-time fees and uncommitted usage/overage.
Renewals & ramps: Count future-dated ups/downs at renewal and pre-scheduled step-ups/downs.
Mixed changes (split once): Tier move = Upsell; more/fewer seats or price change = Add-on/Reduction; new product = Cross-sell.
Audit trail: Reconcile CARR ↔ ARR each month so every movement is explained.
Formula
CARR (Contracted/Committed ARR) = the ARR you’d have today if every signed future-dated change were already live (live ARR + signed future increases − signed future decreases).
Practical considerations:
Signed only: Include fully executed contracts/order forms; exclude pipeline/intent.
Snapshot timing: Use signature date to enter items into CARR; they leave CARR and hit ARR on the effective (go-live/end) date.
Scope: Annualized recurring value only; exclude one-time fees and uncommitted usage/overage.
Renewals & ramps: Count future-dated ups/downs at renewal and pre-scheduled step-ups/downs.
Mixed changes (split once): Tier move = Upsell; more/fewer seats or price change = Add-on/Reduction; new product = Cross-sell.
Audit trail: Reconcile CARR ↔ ARR each month so every movement is explained.
Formula
CARR (Contracted/Committed ARR) = the ARR you’d have today if every signed future-dated change were already live (live ARR + signed future increases − signed future decreases).
Practical considerations:
Signed only: Include fully executed contracts/order forms; exclude pipeline/intent.
Snapshot timing: Use signature date to enter items into CARR; they leave CARR and hit ARR on the effective (go-live/end) date.
Scope: Annualized recurring value only; exclude one-time fees and uncommitted usage/overage.
Renewals & ramps: Count future-dated ups/downs at renewal and pre-scheduled step-ups/downs.
Mixed changes (split once): Tier move = Upsell; more/fewer seats or price change = Add-on/Reduction; new product = Cross-sell.
Audit trail: Reconcile CARR ↔ ARR each month so every movement is explained.
Worked Example
Date: Mar-31 Live ARR
(Mar 31): $1,200,000
Account | Event | Signed by Mar 31? | Effective date | Δ CARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo $24,000 | Yes | Apr 1 | 24,000 | Future increase | Signed, not live |
B | Upsell +$15,000 | Yes | Apr 15 | 15,000 | Future increase | Signed, not live |
C | Down-sell −$8,000 | Yes | May 1 | -8,000 | Future decrease | Signed, not live |
D | Cancel $40,000 to $0 | Yes | Jun 30 | -40,000 | Future decrease | Signed, not live |
E | Renewal $100,000 → $100,000 | Yes | Jul 1 | 0 | No change | Price flat |
F | Cross-sell +$12,000 | No (Apr 2) | Apr 10 | 0 | — | Signed after Mar 31 |
CARR @ Mar 31
= $1,200,000 + (24,000 + 15,000) − (8,000 + 40,000) = $1,191,000
Notes
Items A/B/C/D/E are in CARR because they’re signed; F is not (signed after the snapshot).
When each item’s effective date arrives, it moves from CARR → ARR (or ARR → $0 for cancels).
One-time onboarding/credits are not part of CARR.
Worked Example
Date: Mar-31 Live ARR
(Mar 31): $1,200,000
Account | Event | Signed by Mar 31? | Effective date | Δ CARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo $24,000 | Yes | Apr 1 | 24,000 | Future increase | Signed, not live |
B | Upsell +$15,000 | Yes | Apr 15 | 15,000 | Future increase | Signed, not live |
C | Down-sell −$8,000 | Yes | May 1 | -8,000 | Future decrease | Signed, not live |
D | Cancel $40,000 to $0 | Yes | Jun 30 | -40,000 | Future decrease | Signed, not live |
E | Renewal $100,000 → $100,000 | Yes | Jul 1 | 0 | No change | Price flat |
F | Cross-sell +$12,000 | No (Apr 2) | Apr 10 | 0 | — | Signed after Mar 31 |
CARR @ Mar 31
= $1,200,000 + (24,000 + 15,000) − (8,000 + 40,000) = $1,191,000
Notes
Items A/B/C/D/E are in CARR because they’re signed; F is not (signed after the snapshot).
When each item’s effective date arrives, it moves from CARR → ARR (or ARR → $0 for cancels).
One-time onboarding/credits are not part of CARR.
Worked Example
Date: Mar-31 Live ARR
(Mar 31): $1,200,000
Account | Event | Signed by Mar 31? | Effective date | Δ CARR ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo $24,000 | Yes | Apr 1 | 24,000 | Future increase | Signed, not live |
B | Upsell +$15,000 | Yes | Apr 15 | 15,000 | Future increase | Signed, not live |
C | Down-sell −$8,000 | Yes | May 1 | -8,000 | Future decrease | Signed, not live |
D | Cancel $40,000 to $0 | Yes | Jun 30 | -40,000 | Future decrease | Signed, not live |
E | Renewal $100,000 → $100,000 | Yes | Jul 1 | 0 | No change | Price flat |
F | Cross-sell +$12,000 | No (Apr 2) | Apr 10 | 0 | — | Signed after Mar 31 |
CARR @ Mar 31
= $1,200,000 + (24,000 + 15,000) − (8,000 + 40,000) = $1,191,000
Notes
Items A/B/C/D/E are in CARR because they’re signed; F is not (signed after the snapshot).
When each item’s effective date arrives, it moves from CARR → ARR (or ARR → $0 for cancels).
One-time onboarding/credits are not part of CARR.
Best Practices
Accurate tracking: Use contract management and billing systems to monitor committed revenue.
Define the rulebook: One page on inclusions/exclusions and FX; use it everywhere.
Track conversion: Report a simple CARR→ARR roll-forward each month.
Separate views: Show CARR by driver (new logo, upsell, cross-sell, renewal, downsell, cancel).
Date hygiene: Store both signed date and effective date on every amendment.
Surface risk: List future-dated downsells/cancels by month so Go-to-Market/ Customer Success can act.
Best Practices
Accurate tracking: Use contract management and billing systems to monitor committed revenue.
Define the rulebook: One page on inclusions/exclusions and FX; use it everywhere.
Track conversion: Report a simple CARR→ARR roll-forward each month.
Separate views: Show CARR by driver (new logo, upsell, cross-sell, renewal, downsell, cancel).
Date hygiene: Store both signed date and effective date on every amendment.
Surface risk: List future-dated downsells/cancels by month so Go-to-Market/ Customer Success can act.
Best Practices
Accurate tracking: Use contract management and billing systems to monitor committed revenue.
Define the rulebook: One page on inclusions/exclusions and FX; use it everywhere.
Track conversion: Report a simple CARR→ARR roll-forward each month.
Separate views: Show CARR by driver (new logo, upsell, cross-sell, renewal, downsell, cancel).
Date hygiene: Store both signed date and effective date on every amendment.
Surface risk: List future-dated downsells/cancels by month so Go-to-Market/ Customer Success can act.
FAQs
CARR vs ARR?
ARR = live subscriptions today. CARR = live ARR plus signed-not-live changes minus signed future decreases.Do renewals belong in CARR?
Yes—if already signed. Include the future ups/downs from the renewal.Are one-time fees included?
No. CARR is recurring only.When does something leave CARR?
On its effective (go-live/end) date—then it hits ARR (or goes to $0).Can CARR go down?
Yes—if signed future down-sells/cancels exceed signed future increases.Is CARR the same as bookings?
No. Gross bookings include one-times and total contract value; CARR counts only annualized recurring portions.
FAQs
CARR vs ARR?
ARR = live subscriptions today. CARR = live ARR plus signed-not-live changes minus signed future decreases.Do renewals belong in CARR?
Yes—if already signed. Include the future ups/downs from the renewal.Are one-time fees included?
No. CARR is recurring only.When does something leave CARR?
On its effective (go-live/end) date—then it hits ARR (or goes to $0).Can CARR go down?
Yes—if signed future down-sells/cancels exceed signed future increases.Is CARR the same as bookings?
No. Gross bookings include one-times and total contract value; CARR counts only annualized recurring portions.
FAQs
CARR vs ARR?
ARR = live subscriptions today. CARR = live ARR plus signed-not-live changes minus signed future decreases.Do renewals belong in CARR?
Yes—if already signed. Include the future ups/downs from the renewal.Are one-time fees included?
No. CARR is recurring only.When does something leave CARR?
On its effective (go-live/end) date—then it hits ARR (or goes to $0).Can CARR go down?
Yes—if signed future down-sells/cancels exceed signed future increases.Is CARR the same as bookings?
No. Gross bookings include one-times and total contract value; CARR counts only annualized recurring portions.
Related Metrics
Commonly mistaken for:
New Logo ARR (this period’s go-live from new customers)
Pipeline ARR (Potential sales, not contracted ARR)
Related Metrics
Commonly mistaken for:
New Logo ARR (this period’s go-live from new customers)
Pipeline ARR (Potential sales, not contracted ARR)
Related Metrics
Commonly mistaken for:
New Logo ARR (this period’s go-live from new customers)
Pipeline ARR (Potential sales, not contracted ARR)
Components:
Index