Contracted Annual Recurring Revenue (CARR)

Contracted Annual Recurring Revenue (CARR) is a financial metric that measures the annualized value of recurring revenue from all signed contracts at a specific point in time. It includes both active subscriptions and contracts that are signed but have a future start date. This metric represents the total committed recurring revenue stream that a company is contractually guaranteed to receive over the next twelve months.

Unlike Annual Recurring Revenue (ARR), which only tracks currently active subscriptions, CARR provides a forward-looking view of the committed revenue pipeline. This makes it a crucial metric for financial forecasting and capacity planning, especially for businesses with long implementation cycles or those that sign multi-year deals well in advance of the service start date. It helps stakeholders understand guaranteed future growth that is not yet reflected in current revenue.

CARR is distinct from Bookings, as it normalizes the contract value to an annual figure and excludes any one-time fees, such as implementation or setup charges. By focusing solely on the recurring component, CARR gives a clearer picture of the company's predictable revenue base and future health.