CARR
Contracted Annual Recurring Revenue — recognized MRR × 12 plus the annualized value of contracts that are signed but not yet live (i.e. implementation, ramp, deferred-start). Per the SMSB standard, CARR sits between ARR (live only) and pipeline (unsigned) on the revenue-certainty spectrum: contractually committed but not yet delivered. Boards reading CARR > ARR gap can quantify the in-flight implementation backlog and the leading indicator of next-period ARR. Common pitfall: counting verbal commitments or LOIs as CARR — only signed contracts qualify under the SMSB definition. — Sales KPI anchored to SaaS Metrics Standards Board.
Rogue ID: sales.carr
Type: Currency
Domain: Sales
Definition
Contracted Annual Recurring Revenue — recognized MRR × 12 plus the annualized value of contracts that are signed but not yet live (i.e. implementation, ramp, deferred-start). Per the SMSB standard, CARR sits between ARR (live only) and pipeline (unsigned) on the revenue-certainty spectrum: contractually committed but not yet delivered. Boards reading CARR > ARR gap can quantify the in-flight implementation backlog and the leading indicator of next-period ARR. Common pitfall: counting verbal commitments or LOIs as CARR — only signed contracts qualify under the SMSB definition.
Formula
CARR = ARR (live, recognized contracts annualized) + Annualized value of signed contracts not yet in production. Per SMSB §CARR: requires a signed contract; excludes verbal commitments, letters of intent, and pipeline. The (CARR − ARR) gap = in-flight ARR awaiting go-live.Why it matters
A leading indicator that ARR alone misses — if CARR is growing faster than ARR, an implementation backlog is building and ARR will accelerate as those contracts go live. Boards use the CARR-to-ARR ratio to interrogate the implementation engine.
How to interpret
A CARR / ARR ratio of 1.00 means everything signed is already live (no implementation backlog); 1.10–1.20 is typical for enterprise SaaS with multi-month implementation timelines; > 1.30 may signal either an implementation bottleneck (operational risk) or a deliberate backlog-build before a known activation event (intentional). Always cross-reference with the implementation team's capacity plan.
Calculation policy
How an AI agent should compute this KPI from messy company data. Free-text rules consumed at reasoning time — not a deterministic DSL. The most common ways to get this wrong are listed under Common miscomputations.
Inclusion rules
- ARR (live, recognized contracts annualized) plus the annualized value of signed contracts not yet in production.
- Requires a signed contract — same recurring-contract definition as ARR; CARR uses the same multi-year handling (contract value divided by term in years).
Exclusion rules
- Verbal commitments, letters of intent, qualified pipeline — these are pipeline, not CARR.
- One-time fees and non-committed usage (same exclusions as ARR).
- Cancelled contracts even if recently signed.
Required inputs
- Live ARR figure for the same period close.
- List of signed contracts with
not yet livestatus and their annualized contract value. - Signed-date and expected go-live-date per pending contract (used in edge-case handling).
Data-source priority
- CRM contract module with explicit
signed but not livestatus (Salesforce opportunity stage + go-live field). - Manual signed-contract log when CRM does not model the implementation backlog.
Edge cases
- Contracts signed but with conditional or rolling go-live dates: include in CARR only if the contract is unconditional.
- Long implementation cycles (> 6 months): include but flag separately; boards may want to see ARR + near-term CARR + far-term CARR.
- Contracts with deferred-start clauses: include from signature date, not from intended start.
Validation checks
- CARR ≥ ARR always; if not, the underlying classifications are wrong.
- (CARR − ARR) should equal the sum of
signed-not-livecontract annualized values.
Common miscomputations
- Reporting CARR as if it were ARR — this is the single most common source of board-deck inflation; always show the (CARR − ARR) gap explicitly.
- Including pipeline / LOIs / verbal commitments — those are not contracted and do not qualify.
- Failing to migrate a CARR contract to ARR on go-live — leaves it double-counted or stranded; reconcile each period.
Related KPIs
sales.arrsales.new_businesssales.blended_cac_ratiosales.new_cac_ratiosales.bookings_backlog_total
Source
SaaS Metrics Standards Board · section: CARR — published 2023-01-01.
Why does this cite SaaS Metrics Standards Board? Read the ontology methodology for the published vs editorial tier system, attribution rules, and dispute process.
Metric definitions reference standards published by the SaaS Metrics Standards Board (saasmetricsboard.com). imboard is not affiliated with, endorsed by, or a member of SMSB.
Stage relevance
| Company stage | Priority |
|---|---|
| Pre-Seed | Recommended |
| Seed | Core |
| Series A | Core |
| Series B | Core |
| Series C+ | Core |
| Public | Core |
Suggested for stages: Pre-Seed, Seed, Series A, Series B, Series C+, Public.
Default owning functions
- Finance
- Sales
Machine-readable
- This KPI as JSON:
/api/ontology/sales/carr.json - All Sales KPIs:
/api/ontology/sales.json - Full catalog:
/api/ontology/index.json
CAC Payback Period
Number of months required for the gross profit generated from a new customer's ARR to recover the fully-loaded S&M spend used to acquire them. The single most decision-useful efficiency metric at the board level — it directly connects acquisition cost, ACV, and gross margin into one "how long until we break even on this customer" answer. Per the SMSB standard, the calculation must use gross-margin-adjusted ARR in the denominator (not raw ARR) to be cross-company comparable. Common pitfall: using raw ARR understates payback by ~25–30 percentage points and breaks comparability with peer benchmarks. — Sales KPI anchored to SaaS Metrics Standards Board.
Expansion CAC Ratio
Fully-loaded S&M plus Customer Success expense attributable to expansion divided by expansion CARR generated in the period. Per SMSB, the efficiency read on the upsell / cross-sell / land-and-expand motion. Distinct from the new-logo CAC ratio because the cost base often includes CSMs whose primary metric is retention but whose secondary metric is expansion — boards expect to see that allocation called out. Common pitfall: excluding CS comp entirely understates the true cost of expansion; including all of CS overstates it. The SMSB standard prescribes a documented allocation rule (typically tied to expansion-quota OTE share). — Sales KPI anchored to SaaS Metrics Standards Board.