Remaining Performance Obligations (RPO): Contracted Revenue Not Yet Recognized

Remaining performance obligations (RPO) represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the reporting date.

In plain English, RPO is contracted consideration that the accounting model expects to recognize as revenue in future periods as the company fulfills the remaining promises in customer contracts.

RPO is tied to revenue-recognition accounting

RPO builds directly on the existing Performance Obligation concept under ASC 606.

If a company has allocated $10 million of transaction price to obligations that have not yet been satisfied, that amount can contribute to RPO even if some of it has not yet been invoiced.

This is why RPO can include both deferred revenue already billed and contracted amounts that will be billed later.

RPO is not automatically all future contracted revenue

The ASC 606 disclosure has practical expedients and scope rules. For example, companies generally need not disclose the transaction price allocated to remaining performance obligations for contracts with an original expected duration of one year or less when the practical expedient is used.

Certain variable-consideration arrangements can also be excluded from the quantitative disclosure under the standard's rules.

That means an RPO balance can understate the broader economic value of future recurring activity for businesses with many short-duration or usage-based contracts.

RPO is not ARR

Annual Recurring Revenue is an issuer-defined operating run-rate metric. RPO is an accounting disclosure anchored to transaction price and unsatisfied performance obligations.

ARR may annualize active contracts that will renew or continue beyond the currently enforceable accounting contract term. RPO may include non-recurring services or long-duration obligations that do not belong in ARR.

RPO is not necessarily backlog

Backlog is usually a company-defined operating measure. Some companies define backlog similarly to RPO, while others include signed agreements, letters of intent, expected work, or items excluded from the accounting disclosure.

The labels should therefore not be treated as synonyms without reading the issuer's definitions.

Current versus longer-term RPO

Companies often disclose how much RPO they expect to recognize during the next twelve months and how much later.

That maturity split can help investors distinguish near-term contracted revenue visibility from longer-duration commitments. It is still not a guaranteed revenue forecast because contracts can be modified, terminated, or affected by future performance and variable consideration.

Investor interpretation

Check the contract-duration practical expedient, variable-consideration treatment, cancellation rights, currency, acquisition effects, and expected recognition timing. A change in RPO can reflect contract duration and billing structure as well as underlying sales activity.

Sources

• FASB ASC 606 implementation guidance, remaining performance obligation disclosure example
• Amplitude 2025 Form 10-K, RPO disclosure
• BlackLine 2025 Form 10-K, contracted-not-recognized revenue

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