Formula
Contracted ARR = live ARR + backlog ARR backlog ARR = ARR of signed contracts with a future start date
Worked example
Illustrative figures. Show the parts, not only the total.
| Line | USD |
|---|---|
| Live ARR | 1,200,000 |
| Signed, starts next month | 60,000 |
| Signed, starts next quarter | 90,000 |
| Contracted ARR | 1,350,000 |
What belongs in backlog
- Signed contracts with a start date after today.
- Signed expansions to existing contracts that take effect later.
Leave out verbal commitments and late-stage pipeline, trials however likely they look, and renewals that are not yet signed.
Show live and backlog separately
Report live ARR and backlog as separate lines with expected start dates. The board can then see how much of contracted ARR goes live next quarter, and whether backlog is growing or being drawn down.
Renewals next to CARR
List contracts ending in the next 90 days, split by whether they renew automatically. An auto-renewing contract past its end date is still revenue, but flag it so someone confirms the renewal.
How Revnewed calculates it
Contracted ARR is live ARR plus signed contracts that start later. Renewals due in the next 90 days are listed and split by auto-renew, and auto-renewing contracts past their end date are flagged as overdue renewals.
Trials appear with the MRR they would add at list price, and never in MRR.
Common mistakes
- Pipeline in the backlog
- If it is not signed, it is not contracted.
- One trend line for two numbers
- Charting CARR and ARR as one series hides when backlog goes live, or does not.