CARR (Committed ARR)

What is CARR?

CARR (Committed Annual Recurring Revenue, sometimes Committed ARR) is the total annualised value of all signed customer contracts — both active and committed-but-not-yet-active. It includes ramp deals scheduled to start in future months, signed expansions that begin at the next renewal, and any contractual revenue commitment the company can rely on as it materialises.

CARR contrasts with ARR (Annual Recurring Revenue), which counts only active subscription contracts at the snapshot date. The CARR-to-ARR gap captures the forward visibility a SaaS company has into revenue that is contractually secured but not yet recognised — typically 3–8% of ARR for B2B SaaS, more for companies that sell ramp deals or multi-year contracts with deferred-start dates.

CARR is the right metric for hiring math, capacity planning, and forward-looking efficiency analysis because it captures the revenue base the company will operate against in the coming 1–3 quarters. ARR is the right metric for current-period income statement reporting and current-quarter snapshot valuation. The two coexist; they answer different questions.

Why CARR matters for operators

CARR makes hiring math accurate when ramp deals are common. A company at $20M ARR with $1.5M of signed-but-not-yet-active contracts has $21.5M CARR — the operating reality the team will deliver against in the coming quarters. Hiring against $20M ARR under-staffs by 7.5%; hiring against CARR aligns capacity with actual forward revenue.

CARR also informs investor due diligence and valuation. Investors increasingly ask for CARR alongside ARR because it reflects revenue durability — a company with $50M ARR and $58M CARR has stronger forward visibility than one with $50M ARR and $50M CARR. The 16% CARR premium suggests a healthier multi-quarter pipeline of contracted revenue.

The trap is reporting CARR instead of ARR for income-statement contexts. Recognised revenue and ARR are GAAP-grounded; CARR is a non-GAAP forward indicator. Using CARR where ARR is expected (board reporting, public-comparable analysis) produces inflated comparisons and triggers credibility loss when the distinction is questioned.

CARR formula

CARR = ARR + Committed-but-not-yet-active ARR

Committed-but-not-yet-active includes:
  - Ramp deals scheduled to activate in future months
  - Signed expansion deals starting at next renewal
  - Multi-year contracts with future-period component starts
  - Backfill contracts pending activation

Example — Growth SaaS:
  Active ARR (today's snapshot):           $42.0M
  Signed ramps (Q3-Q4 activations):         $1.8M
  Signed expansions (next renewal):         $0.9M
  Multi-year future-period component:       $0.6M
  Total CARR:                              $45.3M
  CARR/ARR ratio:                          1.079 (7.9% premium)

CARR vs ARR over time (illustrative):
  Q1: ARR $35M, CARR $37.2M (+6.3%)
  Q2: ARR $38M, CARR $40.5M (+6.6%)
  Q3: ARR $41M, CARR $43.4M (+5.9%)
  Q4: ARR $43M, CARR $45.3M (+5.3%)

Stable CARR/ARR ratio of 5–8% is healthy for B2B SaaS;
above 12% suggests a backfill of ramps that hasn't yet activated.

CARR benchmarks and CARR/ARR ratios

Sources: KeyBanc SaaS Survey 2025; OpenView SaaS Benchmarks 2025; Bessemer State of the Cloud 2025; Fairview customer data.

Common mistakes when reporting CARR

1. Reporting CARR as ARR. CARR includes contracted revenue that is not yet active or recognised. Reporting CARR where ARR is expected (board pages, investor decks, public benchmarking) inflates the headline number and triggers credibility loss when the distinction is examined.

2. Not specifying the CARR composition. CARR includes ramp ARR, future-start expansion, and multi-year future-period components. Reporting a single CARR figure without composition hides whether the premium is durable (signed expansion) or risky (deals that may slip in activation).

3. Including pipeline in CARR. CARR is contractually committed only — signed orders, executed agreements. Pipeline opportunities (open deals not yet closed) belong in pipeline coverage analysis, not CARR. Mixing the two inflates CARR and corrupts the metric's meaning.

4. Treating CARR as durable revenue. Ramp deals and future-start contracts can still cancel before activation, especially in the 30–90 days before start. CARR's durability is real but not absolute — apply a haircut (typically 2–5%) for activation slippage when planning aggressively against CARR.

5. Comparing CARR across companies with different contract structures. CARR/ARR ratios are motion-dependent. Enterprise companies with lots of ramps and multi-year deals have higher ratios structurally than SMB companies with month-to-month contracts. Compare ratios within motion peer groups, not across them.

How Fairview tracks CARR alongside ARR

Fairview's Operating Dashboard tracks CARR and ARR side by side, breaking out the committed-but-not-active components by type — ramps, future-start expansions, multi-year future-period — so forward visibility is visible alongside the income-statement number.

The Next-Best Action Engine flags activation drift: "CARR is $48.2M, ARR is $44.8M (CARR/ARR ratio 7.6%, above mid-market healthy range of 3–8%). Within the gap, $2.4M is ramp activations scheduled for the next 90 days. Recommend a ramp-activation tracking review — historical ramp slippage is 11%, implying $264K of ARR risk before the quarter ends."

→ See how Fairview tracks CARR

CARR vs ARR vs MRR

ARR is the standard income-statement metric; CARR is the forward-visibility complement; MRR is the operational monthly view. Together they describe the recurring revenue base from three angles.

Frequently asked questions

Sources

1. KeyBanc SaaS Survey 2025
2. OpenView SaaS Benchmarks 2025
3. Bessemer State of the Cloud 2025
4. ICONIQ Growth Topline Report 2025
5. Fairview customer data (B2B SaaS, 2025)