Contracted ARR, live ARR, and RPO: the SaaS metrics that come straight from your contracts

Your board deck says ARR is one number. Your auditor's footnote says RPO is another. Your sales team quotes a third. All three are right, because they answer different questions. Contracted ARR is the annualized recurring value of every signed subscription, including deals that haven't started billing. Live ARR counts only subscriptions that are active and billing today. RPO (remaining performance obligations) is the total contract value you have not yet recognized as revenue, as required by ASC 606. The first two are management metrics. RPO is a GAAP disclosure. All three come straight from the same contract book, which is why they should reconcile to each other every month.

Key takeaways

• Contracted ARR (CARR) = live ARR + signed-but-not-yet-live ARR − known churn. It measures committed run-rate, not revenue.

• Live ARR counts only subscriptions that are provisioned and billing on the measurement date. It is the number closest to what revenue will look like next month.

• RPO is the transaction price allocated to unsatisfied performance obligations under ASC 606-10-50-13. It covers the full remaining contract term, not one year, and includes both deferred revenue and unbilled contract value.

• ARR and CARR are non-GAAP and defined by each company. RPO is defined by the standard, which is why auditors test it and why your ARR definitions need a written policy.

• One six-contract example below produces live ARR of $240,000, contracted ARR of $324,000, and RPO of $564,000 from the same contract book.

• Loopfour, the deterministic finance workflow automation platform, calculates all three from signed contract data on a fixed schedule, so the numbers reconcile instead of drifting apart across spreadsheets.

What is contracted ARR versus live ARR?

Contracted ARR is the annualized recurring revenue from every signed, committed subscription. Live ARR is the annualized recurring revenue from subscriptions that are active and billing right now. The gap between them is signed business that hasn't gone live yet, minus customers who have already told you they're leaving.

Neither metric is defined by GAAP or IFRS. Each company sets its own policy, which is the first thing a diligence team asks to see. Most SaaS finance teams use a version of this bridge:

Live ARR + signed-not-live new and expansion ARR − contracted churn and downgrades = contracted ARR

Why the gap between contracted and live ARR matters

The gap between contracted and live ARR is your implementation backlog, expressed in dollars. A large and growing gap means sales is closing faster than onboarding can deliver. That is a revenue timing risk, and it shows up in your recognized revenue forecast before it shows up in bookings.

A company selling to enterprises with 90-day implementations will carry a permanent gap. A self-serve product that provisions on checkout will carry almost none. What matters is the trend, not the absolute size. If contracted ARR grows 30% and live ARR grows 10%, the gap is compounding, and your controller should know why.

What counts in each metric

Only recurring, committed subscription fees belong in either ARR number. One-time implementation fees, professional services, and hardware do not. Usage-based fees are the most contested line: some companies include a committed minimum, others exclude usage entirely. Pick one rule and write it down.

What is remaining performance obligation in SaaS?

Remaining performance obligation (RPO) is the aggregate transaction price allocated to performance obligations that are unsatisfied, or partially unsatisfied, at the end of the reporting period. That wording comes from ASC 606-10-50-13. Public companies must disclose the amount and explain when they expect to recognize it, either in time bands or qualitatively. IFRS 15 carries an equivalent requirement.

In a SaaS business, RPO is the contracted revenue still to come. It has two parts:

• Deferred revenue (a contract liability): amounts already invoiced but not yet earned.

• Unbilled contract value: amounts the customer is committed to pay under a non-cancellable contract but that you haven't invoiced yet.

RPO covers the whole remaining contract term. A three-year deal signed yesterday adds three years of value to RPO but only one year of value to ARR. That is the single biggest reason the numbers diverge. For a refresher on how the five-step model sets the transaction price in the first place, see our guide to ASC 606 and the five-step model.

What RPO excludes

RPO excludes anything the customer can cancel without a substantive penalty. If a contract can be terminated for convenience with no meaningful cost, the enforceable contract term under ASC 606 is shorter than the stated term, and only the enforceable portion counts.

ASC 606-10-50-14 through 50-14A also give practical expedients that let you leave certain amounts out of the disclosure:

• Performance obligations in contracts with an original expected duration of one year or less.

• Obligations where you recognize revenue using the "right to invoice" method.

• Certain variable consideration, such as sales- or usage-based royalties on licenses of intellectual property, or variable amounts allocated entirely to a wholly unsatisfied obligation.

Fixed consideration is never exempt. If you elect an expedient, you must disclose that you elected it, as Deloitte's roadmap on revenue disclosures sets out in detail.

What is current RPO?

Current RPO (cRPO) is the portion of RPO expected to be recognized within the next 12 months. It isn't a separate GAAP requirement. Many public SaaS companies report it anyway because it maps cleanly to next year's revenue and strips out the noise of long contract terms.

A worked example: one contract book, three numbers

Here is a single contract book measured on June 30, 2026. Every contract bills in advance. The company has not elected the one-year practical expedient, so all contracts appear in RPO.

The three numbers, contract by contract

Each column below applies one rule consistently. Live ARR asks "is it billing today?" Contracted ARR asks "is it committed recurring run-rate?" RPO asks "how much contracted value is left to recognize?"

How the numbers bridge

Live ARR and contracted ARR reconcile through signed-not-live business and known churn:

$240,000 live ARR → + $96,000 (C) + $24,000 (F) signed not live → − $36,000 (E) contracted churn → $324,000 contracted ARR

RPO reconciles to the balance sheet through deferred revenue. Only $63,000 of the $564,000 sits on the balance sheet as deferred revenue. The other $501,000 is contracted but unbilled, so it appears only in the footnote. If you're building the deferred side of that bridge, our deferred revenue waterfall template walks through the schedule.

The RPO timing disclosure

ASC 606 requires you to explain when RPO converts to revenue. Time bands are the most common approach:

Notice what the example shows. Contract C adds $96,000 to contracted ARR and $192,000 to RPO but nothing to live ARR. Contract E still counts in live ARR while contributing zero to contracted ARR. If the company elected the one-year expedient, B and E would drop out of the disclosure and reported RPO would fall to $546,000.

Where the three metrics diverge, and why it causes trouble

The metrics diverge because they measure different things: run-rate, commitment, and remaining obligation. The trouble starts when each is calculated in a different system by a different person.

The common failure is three sources of truth. Contracted ARR comes from Salesforce, live ARR from Stripe or the billing module, and RPO from a spreadsheet the controller rebuilds every quarter. When a discount, start date, or cancellation clause changes in one system and not the others, the numbers stop reconciling. Nobody notices until an investor or auditor asks why.

The fix is to calculate all three from the same contract record. Signed contract → extracted terms → one contract schedule → live ARR, contracted ARR, and RPO. That way, a changed start date moves all three numbers at once.

Book a workflow review to see how your contract data flows from signature to these three metrics today.

How to choose a way to calculate contracted ARR, live ARR, and RPO

Choose the approach whose output your auditor and your board will both accept, and whose upkeep you can actually sustain. For most finance teams, that means one contract source and a deterministic calculation.

Spreadsheets are flexible and fast to start. They handle a few dozen contracts well. They break when contract volume, amendments, and multi-year terms grow faster than the person maintaining the formulas.

Subscription and revenue platforms calculate these metrics well once data is inside them. Their limit is the handoff. If contract terms reach the platform through manual entry, the metric is only as good as the keying.

Loopfour takes a different position. Loopfour Studio pulls signed contracts from DocuSign or PandaDoc, uses the Contract Agent for the scoped task of extracting start date, term, price, and cancellation terms, and routes any extraction below the confidence threshold to a named reviewer for approval in Slack. Once terms are approved, the calculation is deterministic: the same contract book produces the same live ARR, contracted ARR, and RPO every run. An AI agent decides what to do at runtime. Loopfour does only what was approved. Every run leaves an execution tree your auditor can inspect, which matters most for RPO. For the upstream half of this flow, see how to automate contract-to-cash.

Frequently asked questions

Is contracted ARR a GAAP metric? No. Contracted ARR and live ARR are non-GAAP operating metrics, and each company defines them in its own policy. RPO is the related GAAP disclosure, defined in ASC 606-10-50-13.

Is RPO the same as backlog? RPO is close to what many companies used to call backlog, but it is defined by ASC 606. It includes only enforceable, non-cancellable contract value allocated to unsatisfied performance obligations. Informal backlog often includes cancellable orders or verbal commitments, which RPO excludes.

Does RPO include deferred revenue? Yes. RPO includes deferred revenue (amounts billed but not yet earned) plus contracted amounts not yet billed. Deferred revenue is usually the smaller part in multi-year SaaS contracts billed annually.

Why is RPO larger than ARR? RPO covers the full remaining contract term, while ARR annualizes run-rate. A three-year, $100,000-per-year contract signed today adds $100,000 to contracted ARR and $300,000 to RPO.

Do private companies have to disclose RPO? ASC 606 lets nonpublic entities elect not to provide the quantitative RPO disclosure. Many private SaaS companies still track RPO internally because investors and acquirers ask for it during diligence.

Should known churn come out of contracted ARR? Most finance teams deduct customers who have given formal non-renewal notice, because contracted ARR is meant to show committed future run-rate. The customer still counts in live ARR until the subscription actually ends.

Conclusion

Contracted ARR, live ARR, and RPO are three views of one contract book. Contracted ARR shows committed run-rate, live ARR shows what's billing, and RPO shows the remaining contract value ASC 606 requires you to disclose. When all three come from the same approved contract data, they reconcile by construction. When they come from three systems, they drift, and someone spends quarter-end explaining why.

Tell us the one workflow your team dreads. We will show it running: deterministic, permissioned, and auditable.

Book a demo.

Sources

• Deloitte DART: Roadmap, revenue recognition, 15.2 contracts with customers (ASC 606-10-50-13 to 50-15)

• FASB: Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606)

Related reading

• What is ASC 606? The five-step model, explained with SaaS examples

• What is deferred revenue? Why it's a liability

• How to build a deferred revenue waterfall schedule

• How to automate contract-to-cash in 2026

• Why Salesforce closed-won deals don't create NetSuite revenue schedules