Remaining performance obligation (RPO) is the total contract revenue a company has signed but not yet recognized: deferred revenue already invoiced plus non-cancelable amounts still to be billed. ASC 606 requires public companies to disclose it each quarter. The part expected to be recognized in the next 12 months is current RPO, or cRPO.
What Is a Remaining Performance Obligation?
RPO is the transaction price allocated to performance obligations a company has not yet satisfied. That is the ASC 606 wording. In plain terms, it is signed work you still owe the customer, valued at the price in the contract.ASC 606-10-50-13 asks a company to disclose two things: the aggregate transaction price allocated to performance obligations that are unsatisfied or partly unsatisfied, and when it expects to recognize that amount as revenue, either in time bands or in words (PwC Viewpoint, 33.4).
A performance obligation is a promise to transfer a distinct good or service, or a series of distinct services that are substantially the same, like each month of a subscription (ASC 606-10-25-14, Deloitte Roadmap 5.3). Most SaaS companies describe the result the same way Salesforce does: RPO "represents all future revenue under contract that has not yet been recognized as revenue and includes unearned revenue and unbilled amounts" (Salesforce 10-K, fiscal 2026).
The working formula follows:
RPO = deferred revenue + contracted amounts not yet invoicedWhat Goes Into RPO and What Stays Out
RPO only counts what the customer is locked into. The disclosure covers the period in which both sides have enforceable rights and obligations, which PwC describes as the noncancelable contract term (PwC Viewpoint, 33.4). That rule decides most edge cases.| Contract item | In RPO? | Why |
|---|---|---|
| Subscription fees for the committed term, invoiced but not yet earned | Yes | Deferred revenue is part of RPO |
| Subscription fees for later years, not yet invoiced | Yes | Contracted and non-cancelable, just unbilled |
| Implementation or training not yet delivered | Yes | Separate performance obligation still owed |
| Committed minimum on a usage contract | Yes | The customer has committed to it |
| Usage above the committed minimum | No | Optional purchases are excluded (PwC) |
| Expected renewal, not yet signed | No | Not contracted, even if renewal is likely |
| Months after a termination for convenience date with no penalty | No | PwC treats a contract cancelable on one month's notice as a one-month contract |
| Pay-as-you-go or on-demand use | No | No commitment; Snowflake excludes these (Snowflake 10-K, fiscal 2026) |
| Professional services billed on time and materials | Usually no | Salesforce and Snowflake both exclude them |
RPO vs cRPO: Current and Noncurrent
cRPO is the slice of RPO expected to turn into revenue in the next 12 months. Noncurrent RPO is everything after that. ASC 606 lets companies choose their own time bands, and most SaaS companies that report a split use 12 months. Many also report cRPO in their earnings releases.Investors usually care more about cRPO. Total RPO is driven by contract length as much as by business size. One long enterprise agreement can add more to total RPO than a quarter of normal sales while barely moving next year's revenue. cRPO counts only what lands in the coming year, so it tracks near-term revenue more closely.
For a ratable subscription, cRPO per contract is simple:
| Measure | Formula | Excel or Sheets |
|---|---|---|
| RPO per contract | Committed fees for the noncancelable term minus revenue recognized to date | =TotalCommitted-RecognizedToDate |
| cRPO per contract (ratable) | Monthly fee x the smaller of remaining months and 12 | =MonthlyFee*MIN(RemainingMonths,12) |
| Noncurrent RPO | RPO minus cRPO | =RPO-cRPO |
| Unbilled RPO | RPO minus deferred revenue | =RPO-DeferredRevenue |
| cRPO share | cRPO divided by RPO | =cRPO/RPO |
Worked Example: One Three-Year Contract
The numbers below are illustrative. A customer signs a three-year subscription on January 1, 2026 at $120,000 a year, $360,000 in total. It is non-cancelable and invoiced annually in advance. Revenue is recognized evenly at $10,000 a month.| Date | Deferred revenue | Not yet invoiced | RPO | cRPO (next 12 months) | Noncurrent RPO | ARR |
|---|---|---|---|---|---|---|
| Jan 1, 2026, year 1 invoiced | $120,000 | $240,000 | $360,000 | $120,000 | $240,000 | $120,000 |
| Mar 31, 2026 | $90,000 | $240,000 | $330,000 | $120,000 | $210,000 | $120,000 |
| Dec 31, 2026 | $0 | $240,000 | $240,000 | $120,000 | $120,000 | $120,000 |
| Jan 1, 2027, year 2 invoiced | $120,000 | $120,000 | $240,000 | $120,000 | $120,000 | $120,000 |
| Dec 31, 2027 | $0 | $120,000 | $120,000 | $120,000 | $0 | $120,000 |
| Dec 31, 2028, term ends | $0 | $0 | $0 | $0 | $0 | $0 until renewal |
Now change one term. If the same contract were billed monthly and let the customer cancel on 30 days' notice with no penalty, RPO at signing would be about one month of fees, $10,000, not $360,000. Same customer, same ARR, a 36x difference in RPO. That is why cancellation terms matter more than contract length on paper.
RPO vs Backlog, Deferred Revenue and ARR
RPO is the only one of these defined by GAAP and audited as a contracted revenue total. The others answer different questions.| Metric | What it counts | Defined by | Where you find it | What moves it |
|---|---|---|---|---|
| RPO | All contracted, non-cancelable revenue not yet recognized | ASC 606 | Revenue note in the 10-K and 10-Q | New contracts, longer terms, revenue recognized, acquisitions, FX |
| cRPO | The part of RPO due in the next 12 months | Company practice under ASC 606 time bands | Revenue note, earnings release | Renewals, new bookings, timing of term start |
| Deferred revenue | Invoiced but not yet earned | GAAP balance sheet | Balance sheet liability (often "unearned revenue") | Billing terms as much as sales |
| Backlog | Varies by company, often contracted but unbilled | No GAAP definition | MD&A or investor deck, if reported | Whatever the company's definition includes |
| ARR | Annualized value of recurring contracts today | Company metric, not GAAP | Investor materials | New, expansion, contraction, churn |
Backlog is the term to be careful with. Some companies use it as a synonym for RPO. Others use it for the unbilled part only, and some count orders the customer can still cancel. When a company reports both, the gap between them usually comes down to cancelable orders or the one-year expedient.
Where Public SaaS Companies Disclose RPO
Look in the revenue recognition note of the 10-K or 10-Q, then in MD&A and the earnings release. Public companies must include RPO in interim reports too (PwC). In the XBRL data the figure is tagged RevenueRemainingPerformanceObligation, which makes it easy to pull across many filers.Here is what two fiscal 2026 filings (years ended January 31, 2026) show:
| Salesforce | Snowflake | |
|---|---|---|
| Total RPO | $72.4B, up 14% | $9.8B |
| Current RPO | $35.1B, up 16% | About 46% of RPO, roughly $4.5B |
| Noncurrent RPO | $37.3B | About 54% of RPO |
| Deferred (unearned) revenue on the balance sheet | $24.3B | $3.4B |
| Fiscal 2026 revenue | $41.5B | $4.7B |
| Notable detail | $2.2B of RPO came from the Informatica acquisition; FX added 3 points to cRPO growth | 12-month split based on historical consumption; capacity contracts had 2.7 years of weighted average remaining life |
What the Salesforce numbers say:
About two thirds of RPO was not yet invoiced. Unearned revenue of $24.3B is about 34% of $72.4B, which leaves roughly $48B contracted but unbilled. A reader who only looks at the balance sheet misses most of the backlog. cRPO equaled about 85% of fiscal 2026 revenue ($35.1B against $41.5B). Before the new year started, revenue already under contract for the next 12 months covered most of the prior year's total. Not all of the growth was organic. The 14% RPO growth includes $2.2B from an acquisition, and currency added 3 points to cRPO growth. Salesforce itself warns that RPO "is not necessarily indicative of future revenue growth."Snowflake shows the usage case. Deferred revenue of $3.4B is again about a third of RPO. Its RPO is real commitment, but how fast it converts depends on customer consumption, so the 46% is an estimate, not a schedule.
How to Calculate RPO for a Private Company
Start from the contract file, not the general ledger. Deferred revenue is in the ledger. The unbilled part usually is not. Private companies are not required to publish the number, since ASC 606-10-50-16 lets nonpublic entities skip the RPO disclosure (Deloitte Roadmap 16.2). It is still the cleanest answer to "how much of next year is already signed?"| Step | What to do |
|---|---|
| 1. List every active contract | Start date, end date, total committed fees, billing schedule and cancellation terms |
| 2. Cut each contract to its non-cancelable term | Stop at the first date the customer can walk away without a penalty |
| 3. Subtract revenue recognized to date | What is left is RPO for that contract |
| 4. Leave out what is not committed | Optional renewals, usage above committed minimums, time and materials work |
| 5. Split by recognition date | Next 12 months is cRPO, everything after is noncurrent |
| 6. Check the total | Deferred revenue on in-scope contracts sits inside RPO, so RPO below the deferred revenue balance means something is missing. The unbilled part (RPO minus deferred revenue) should tie to future invoices on the billing schedule |
Using RPO in a Revenue Forecast
cRPO is the floor of next year's revenue. The forecast is everything you build on top of it. For a subscription business, the coming year breaks into three layers: contracted revenue already in cRPO, renewals of contracts that expire inside the year, and new business that has not been signed yet.Each layer needs its own method. Pete's view is that renewals and new business should never be forecast the same way. With a renewal, you generally know the amount (the current price, or the current price plus a lift) and you know when it should close, so ORM models renewal timing as a window around the renewal date. New business timing depends on when the deal last changed stage. Blend the two into one number and a miss cannot be traced to a cause.
RPO also explains a pattern that worries people for no reason. On a multi-year contract billed annually, RPO is high at the start, drops to zero just before the renewal and climbs again if the customer renews. Salesforce's 10-K says so directly: low RPO on an agreement often comes with an impending renewal and may not indicate whether the customer will renew. The renewal risk signals live elsewhere. ORM starts to see renewal risk come into focus about six months before the renewal date, and customers on auto-renew are more likely to renew than those who are not.
For the full model, from a contracted floor up through renewals and pipeline, see how to forecast revenue.
What RPO Does Not Tell You
RPO measures commitment, not health. A few limits to keep in mind: Duration inflates it. Moving from one-year to three-year terms can triple RPO with no change in ARR. It ignores renewals and expansion until they are signed. Acquisitions and currency move it. Salesforce's fiscal 2026 numbers show both. Usage contracts make the timing an estimate, as Snowflake's disclosure shows. Elections change the scope. A company using the one-year expedient reports less than one that does not.Read RPO next to cRPO, deferred revenue, billings and ARR. Each one answers a question the others cannot.
Frequently Asked Questions
Is remaining performance obligation the same as backlog?
Not exactly. RPO is defined by ASC 606, audited, and limited to non-cancelable contract value not yet recognized. Backlog has no GAAP definition, so each company sets its own rules, and some include cancelable orders or leave out amounts already invoiced. In SaaS, people often say backlog when they mean the unbilled part of RPO. Read the company's own definition before you compare the two.
What qualifies as a performance obligation?
A performance obligation is a promise in a contract to transfer a distinct good or service, or a series of distinct services that are substantially the same and transfer the same way, such as each month of a subscription (ASC 606-10-25-14). A SaaS contract often has several: the subscription, implementation, and training. RPO adds up the price allocated to the ones not yet delivered.
What is the difference between deferred revenue and RPO?
Deferred revenue is the part of the contract you have invoiced but not yet earned. It sits on the balance sheet as a liability. RPO adds the contracted amounts you have not invoiced yet, so it is always the larger number. On a three-year deal billed annually, deferred revenue holds at most one year while RPO holds every remaining year.
What is the difference between cRPO and RPO?
RPO is all contracted revenue not yet recognized, however far out it runs. cRPO, current RPO, is the part a company expects to recognize in the next 12 months. The rest is noncurrent RPO. Investors watch cRPO growth because long multi-year deals can push total RPO up without changing next year's revenue much.
Does RPO include month-to-month or cancelable contracts?
Only the part the customer cannot cancel without a penalty. PwC's guide gives the example of a contract with a 30-day termination for convenience: it is in substance a one-month contract, so only one month goes into RPO. Optional renewals and usage above a committed minimum are left out too, because the customer has not committed to them.
Do private companies have to disclose RPO?
Public companies must disclose it in annual and quarterly filings. Under ASC 606-10-50-16, nonpublic entities may elect not to provide the RPO disclosures. Many private SaaS companies still calculate it, because it shows how much revenue is already under contract for next year, which a board or buyer will ask about in a raise or a sale.
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