Committed annual recurring revenue (CARR)
Also called: CARR, Contracted ARR
ARR plus contracted revenue that has been signed but has not yet started billing.
CARR = Live ARR + Signed-but-not-yet-live contract value (annualised) − ARR from customers who have given notice
CARR includes revenue that is contractually committed but not yet flowing. The gap between ARR and CARR is made up of deals that are signed but sitting in implementation, in a future-dated start, or in the first step of a ramp.
For businesses with long onboarding cycles — anything requiring data migration, integration work or a phased rollout — CARR is often the more representative number. A company with $8M ARR and $11M CARR has three million dollars of signed revenue waiting on delivery, which is a materially different position from a company where the two figures match.
Live ARR vs CARR
| Live ARR | CARR | |
|---|---|---|
| Counts | Contracts active and billing today | Live ARR plus signed contracts not yet live |
| Known churn | Counted until the customer actually leaves | Subtracted as soon as notice is given |
| Answers | What are we billing? | What have customers committed to? |
| Best for | Cash planning, revenue forecasting | Sales performance, capacity and hiring plans |
Take a company with $10M of live ARR. It has $1.5M of signed contracts starting next quarter, and a $300K customer has given notice. Its CARR is $10M + $1.5M − $0.3M = $11.2M. Both numbers are true. Live ARR tells finance what will be invoiced; CARR tells the board what has been sold.
Where it gets abused
CARR is easier to inflate than ARR, and inflation happens in predictable places:
- Counting the full value of a ramp deal at its year-three rate rather than its current-year rate.
- Including deals with termination-for-convenience clauses as committed, when the customer can exit on 30 days’ notice.
- Including pilots and paid proofs of concept that were never going to auto-renew.
- Never removing deals that stall in implementation and quietly die.
A disciplined CARR definition specifies which contract states count, and reconciles to ARR as those contracts go live. If nobody can produce that reconciliation, the number is marketing rather than reporting.
Frequently asked questions
What is the difference between live ARR and CARR?
Live ARR counts only contracts that are active and billing today. CARR adds contracts that are signed but not yet live, such as future-dated starts and deals still in implementation, and subtracts known churn from customers who have given notice. Live ARR shows what is billing; CARR shows what is committed.
How do you calculate CARR?
Start with live ARR, add the annualised value of signed contracts that have not started billing, and subtract the ARR of customers who have given notice to cancel or downgrade.
Should a ramp deal count at its full value in CARR?
No. Count the contract at the annualised value currently committed for the next twelve months, not the year-three rate. Later step-ups are added as they take effect.
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