Committed Annual Recurring Revenue (CARR)

Committed Annual Recurring Revenue (CARR) is the full annualized value of every recurring contract a company has signed — including deals that are booked but not yet activated, onboarded, or billing. Annual Recurring Revenue counts what's live and generating cash today. CARR counts that plus everything under signature waiting to go live. The gap between the two numbers is the most honest health check a SaaS finance team has.

How CARR Is Calculated

CARR = live ARR + signed-but-not-yet-live ARR.

Start with active recurring revenue, annualized. Add the annualized value of contracts that are signed but still in implementation, in a free-onboarding window, or set to start next quarter. Exclude anything that isn't contractually committed — no verbal yeses, no bookings in legal redline, no pipeline. The test is binary: is there a signature obligating recurring payment? If yes, it's CARR. If no, it isn't.

CARR Worked Example

A vendor reports $10M in live ARR. It has also signed $2M of annualized contracts that are mid-implementation and won't bill for 60 to 90 days.

The company is a $10M ARR business and a $12M CARR business at the same instant. Both are true. A board that only sees ARR undercounts what's already won; a board that only sees CARR overcounts what's actually earning. You need the pair.

When Sales Teams Use CARR

Finance uses CARR to forecast the cash that's already locked but not yet flowing — the $2M above will convert to billed ARR on a known schedule. RevOps uses the CARR-to-ARR conversion lag to spot an implementation backlog before it becomes a churn problem. Founders quote CARR in board decks and fundraising because it credits the full sales effort, not just the slice that survived a slow onboarding queue. Investors track both numbers on the ARR waterfall because the spread tells them how fast bookings turn into revenue.

Common CARR Gaming Patterns

CARR is useful precisely because it counts signed-not-live revenue. That same feature is the exploit.

The headline swap is the first move. A team that missed its ARR number reports CARR instead — same logo count, bigger figure, no asterisk — and lets the audience assume it's live revenue. The $12M sounds like a quarter that hit. The $10M says it didn't.

Then there's the never-converts problem. CARR assumes signed deals go live. Some don't — implementation stalls, the champion leaves, the customer churns inside the onboarding window before a single invoice goes out. Counting that contract as committed revenue books a win that never materializes, and a CARR figure with no conversion-rate disclosure hides exactly how much of the backlog is rotting.

The third pattern is term laundering. A 14-month contract gets annualized as if it were a clean 12-month recurring commitment, or a one-time implementation fee gets folded into the recurring line to inflate the annualized number. Both inflate CARR without adding a dollar of durable recurring revenue.

What CARR does not tell you: how much of that committed revenue will actually bill, or when. A healthy operation watches the spread between CARR and live ARR shrink as onboarding clears. A struggling one watches it widen — and reports the bigger number anyway.