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SaaS Metrics Library
Remaining Performance Obligation (RPO): Calculation, Benchmarks & Improvement Guide
Remaining performance obligation (RPO) is the contracted revenue a company has not yet recognized. Calculate it from your deferred revenue and unbilled contract value, split out the next twelve months, and see how it differs from ARR and backlog.
REMAINING PERFORMANCE OBLIGATION
No published benchmark: no survey of private SaaS companies reports RPO. The disclosure itself is defined in ASC 606-10-50-13 and IFRS 15 paragraph 120.
This article will provide
- Calculation
- Benchmarks
- Improvement
Remaining performance obligation (RPO) is the value of contracted revenue that has not yet been recognized. It is the transaction price a company has allocated to performance obligations that are unsatisfied, or partially unsatisfied, at the end of the reporting period.
That definition comes from the revenue standards. ASC 606-10-50-13 requires an entity to disclose the aggregate amount of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations at period end, and to explain when it expects to recognize that amount as revenue, either in time bands or qualitatively. IFRS 15 paragraph 120 contains the equivalent requirement.
In practice, RPO combines two things finance teams already track:
- revenue already billed but not yet earned, which is the deferred revenue balance; and
- revenue contracted but not yet billed, often called unbilled backlog.
How is RPO calculated?
RPO = deferred revenue (contract liabilities) + contracted amounts not yet billed
Inputs:
- Deferred revenue: amounts billed or collected for service not yet delivered, at period end.
- Contracted amounts not yet billed: the remaining value of signed contracts that has not been invoiced. Only amounts the customer is committed to count; a period the customer can cancel without penalty is generally not part of the contract for this purpose.
Many companies also report current RPO: the part of RPO expected to be recognized as revenue within the next twelve months. It is not a defined term in the standards, but it follows from the time-band disclosure in ASC 606-10-50-13(b).
Worked example
At December 31, a company has $300,000 of deferred revenue and $700,000 of signed, non-cancelable contract value not yet invoiced. Of the total, $600,000 is scheduled to be recognized in the next twelve months.
RPO = $300,000 + $700,000 = $1,000,000
Current RPO share = $600,000 ÷ $1,000,000 = 60%
| Line | Amount |
|---|---|
| Deferred revenue (billed, not yet earned) | $300,000 |
| Contracted, not yet billed | $700,000 |
| Remaining performance obligation | $1,000,000 |
| Of which expected within 12 months (current RPO) | $600,000 |
| Of which expected after 12 months | $400,000 |
Try it with your numbers
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$
$
Share expected in the next 12 months: 60.0% in the next 12 months
$1,000,000remaining performance obligation
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Download the 2026 SaaS Benchmark Report We’ve emailed you a copy as well.How is RPO used by SaaS companies?
- Revenue visibility. RPO shows how much future revenue is already under contract. Set against next year's revenue plan, current RPO shows how much of the plan is secured and how much still has to be sold or renewed.
- A bridge between bookings and revenue. New contracts increase RPO when they are signed, and RPO falls as revenue is recognized. Explaining the movement connects sales activity to the income statement. See bookings vs revenue.
- Contract length signal. A rising share of RPO beyond twelve months means customers are committing to longer terms.
- Audit-ready backlog. Because RPO follows the revenue standards, it is a more defensible measure of contracted future revenue than a CRM pipeline or sales-team backlog figure.
RPO is not ARR. Annual recurring revenue is a run rate of the recurring contract base for the next year; RPO is the total remaining value of committed contracts, which can cover several years and includes non-recurring obligations such as implementation services. Committed MRR is closer to ARR than to RPO, because it is a monthly run rate.
What is a good result?
There is no target RPO level, because RPO depends on contract length and billing terms as much as on sales performance. Useful readings without a benchmark:
- RPO growth against revenue growth. RPO growing faster than revenue suggests contracted demand is building. RPO growing more slowly can mean shorter contracts or weaker renewals.
- Current RPO against next year's plan. The higher the share of planned revenue already in current RPO, the less the plan depends on new sales.
- Consistency of measurement. RPO movements are only meaningful if cancellable periods, practical expedients and non-recurring services are treated the same way every period.
What are the RPO benchmarks?
No published benchmark. No survey of private SaaS companies publishes an RPO figure with a stated sample size and data year. Public companies disclose RPO in their filings, but a figure built from individual filings would be a calculation, not a benchmark, so none is given here.
What the standards do fix is the disclosure. ASC 606-10-50-13 requires the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied at the end of the period, and an explanation of when that amount is expected to be recognized, either in time bands or with qualitative information. ASC 606-10-50-14 allows an entity to leave out performance obligations in contracts with an original expected duration of one year or less, and ASC 606-10-50-16 lets most entities that are not public business entities elect not to give the disclosure at all. IFRS 15 paragraphs 120 and 121 set out the equivalent requirement and expedients.
Sources: Deloitte DART, Revenue Roadmap, 15.2 Contracts with customers (ASC 606-10-50-13 to 50-16); IFRS 15 paragraphs 120 and 121, as reproduced in the identical Australian standard, AASB 15. Checked October 26, 2026.
Contracted revenue
See billed and contracted revenue side by side.
ScaleXP flags closed-won deals that have not been invoiced, or invoiced for a different amount, and reports bookings, billings and recognized revenue side by side.
ScaleXP prepares the schedules and journals; they post once finance approves.
Automate Your SaaS MetricsRPO worked example
- Accounting: Xero, QuickBooks, Zoho Books
- CRM (with Xero or QuickBooks Online): HubSpot, Salesforce, Pipedrive
Deferred revenue at December 31
$300,000
Billed or collected, not yet earned.
Illustrative example figures, not your live data.
What to do with your RPO number
- Build it from contracts, not from the pipeline. Include signed contracts only, and only the non-cancelable portion.
- Split it into time bands. Report current RPO (next twelve months) separately from longer-dated RPO, in line with the time-band approach in ASC 606-10-50-13(b).
- Record the practical expedients you use. ASC 606-10-50-14 lets an entity omit performance obligations in contracts with an original expected duration of one year or less, and those where revenue is recognized under the right-to-invoice expedient (606-10-55-18). IFRS 15 paragraph 121 has equivalent expedients. Using them lowers reported RPO, so state which apply.
- Reconcile the movement. Opening RPO + new contracts and renewals − revenue recognized − cancellations and modifications = closing RPO. An unexplained difference usually means a contract is missing from the schedule.
- Read it with deferred revenue. The billed part of RPO should agree to the deferred revenue balance.
How ScaleXP supports RPO reporting
ScaleXP prepares the schedules and journals; they post once finance approves. ScaleXP imports Xero invoices and credit notes for deferred revenue, recalculates the schedule when an invoice changes, and flags exceptions for review, which keeps the billed part of RPO in line with the ledger.
For the unbilled part, ScaleXP creates a contract from each closed-won deal and its invoices, tracks the renewal against it, and includes contracted revenue not yet invoiced and renewals due in the forecast. The RPO disclosure itself, including which practical expedients apply, stays a finance decision.
Frequently asked questions
What is the difference between RPO and deferred revenue?
Deferred revenue is the part of contracted revenue that has already been billed or collected but not yet earned. RPO is the full transaction price allocated to unsatisfied performance obligations, so it includes deferred revenue plus contracted amounts not yet invoiced. A three-year contract billed annually has one year in deferred revenue after the first invoice, but all remaining contracted value in RPO. RPO is therefore equal to or larger than deferred revenue.
What is current RPO?
Current RPO is the part of remaining performance obligations a company expects to recognize as revenue within the next twelve months. It is not a defined term in ASC 606 or IFRS 15, but it follows from their requirement to explain when RPO will be recognized, often in time bands. Many companies report it because it shows how much of next year's revenue is already under contract, which is closer to what boards and investors want to know.
Is RPO the same as backlog?
RPO is a form of backlog with an accounting definition. Backlog has no standard meaning and may include signed contracts that are cancellable, verbal commitments or expected renewals. RPO, under ASC 606-10-50-13 and IFRS 15 paragraph 120, covers only the transaction price allocated to unsatisfied performance obligations in enforceable contracts. Because the definition is fixed, RPO is easier to audit and compare over time than a backlog figure from the CRM.
Does RPO include monthly subscriptions?
Usually very little. A month-to-month subscription that the customer can cancel without penalty has, at most, the current month as an enforceable contract, so its contribution to RPO is small. In addition, ASC 606-10-50-14 lets an entity omit performance obligations in contracts with an original expected duration of one year or less from the disclosure. Companies built on monthly plans therefore report low RPO even with high ARR.
Do private companies have to disclose RPO?
Not always. Under US GAAP, ASC 606-10-50-16 lets most entities that are not public business entities elect not to give the remaining performance obligation disclosures in ASC 606-10-50-13 to 50-15. They must still disclose the contract balances required by ASC 606-10-50-11. Many private SaaS companies track RPO internally anyway, because investors and lenders ask how much future revenue is already under contract.
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