RPO Explained: The Overlooked SaaS Metric That Signals Growth | SaaS Metrics School | RPO
•October 27, 2025
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Why It Matters
RPO gives investors and acquirers a clearer view of near-term, contractually backed revenue, improving confidence in growth forecasts and valuation. Tracking RPO alongside retention and ARR strengthens financial storytelling for fundraising or M&A.
Key Takeaways
- •RPO quantifies future contracted revenue
- •Derived from ASC 606 revenue recognition
- •Combines deferred revenue and unbilled contracts
- •Signals demand strength and customer commitment
- •Boosts valuation narratives alongside NRR and GRR
Pulse Analysis
RPO has emerged as a critical bridge between traditional SaaS metrics and the nuanced demands of modern investors. While ARR and MRR capture revenue that has already been recognized, RPO shines a light on the pipeline of signed, non‑cancelable contracts that have yet to be billed or earned. By aggregating deferred revenue with unbilled contractual amounts, companies gain a single, forward‑looking figure that aligns with ASC 606 requirements and offers a clearer picture of revenue durability. This visibility is especially valuable during due diligence, where investors scrutinize the predictability of future cash flows.
Integrating RPO into a broader metric suite amplifies its strategic impact. When paired with Net Revenue Retention (NRR) and Gross Revenue Retention (GRR), RPO illustrates not only how well a business retains existing customers but also how much committed revenue lies ahead. For growth‑stage SaaS firms, a rising RPO trend signals strong market demand and customer willingness to lock in multi‑year agreements, which can justify higher valuation multiples. Conversely, stagnant or declining RPO may raise red flags about sales effectiveness or contract churn, prompting operational adjustments before they affect top‑line performance.
Practically, calculating RPO is straightforward: pull the deferred revenue balance from the financial statements and add the unbilled portion of all multi‑year contracts. Companies like Snowflake, HubSpot, and Salesforce publicly disclose RPO, demonstrating its relevance across subscription and usage‑based models. By tracking RPO internally, SaaS leaders can forecast revenue runway, align sales incentives with long‑term commitments, and craft compelling narratives for fundraising or exit scenarios. The metric’s simplicity, regulatory backing, and forward‑looking insight make it an indispensable tool for any SaaS CFO aiming to drive sustainable growth.
Original Description
If your RPO is going up, you might be sitting on a beautiful treasure chest of future revenue… even if investors and operators around you barely notice. Welcome to another episode of SaaS Metrics School, where SaaS operators level up their business and careers with the right data and metrics. I’m Ben Murray, The SaaS CFO, and today we’re cracking open one of the most overlooked growth indicators in SaaS: RPO.
♟ What is RPO anyway?
RPO stands for Remaining Performance Obligations. It reflects the total value of contracted products and services that a SaaS company has promised to deliver in the future. Think of it as visibility into your revenue pipeline that is already signed, sealed, and waiting to be delivered and recognized. In other words, RPO is a crystal ball into your future ARR.
Even if you are a private SaaS company and you rarely talk about RPO explicitly, you still talk about it indirectly when speaking about signed multi-year contracts, contracted backlog, and future revenue increases tied to existing agreements. RPO simply gives structure and clarity to that conversation. Investors love that clarity.
♟ Why RPO matters
RPO shows the economic potential already locked into your contracts. Private equity, strategics, and public market investors use it to measure predictability and scale. If that line moves up and to the right, someone will notice. A strong RPO trend supplements your other key SaaS metrics such as:
• ★ Net Revenue Retention (NRR)
• ★ Gross Revenue Retention (GRR)
• ★ Contracted ARR
• ★ Expansion MRR
• ★ CAC efficiency and growth indicators
When you combine RPO with retention and growth data, you create a powerful narrative for valuation, due diligence, and fundraising.
♟ Where did RPO come from?
RPO emerged from the glorious accounting world of ASC 606, the revenue recognition standard that changed how subscription companies book revenue. Under ASC 606, public SaaS companies must disclose RPO if it applies to how they invoice and contract with customers. Private companies can choose to track it and benefit from the visibility.
♟ How to calculate RPO
You only need two pieces of information:
1️⃣ Deferred Revenue sitting on the balance sheet
2️⃣ Unbilled (or uninvoiced) contracted amounts in your multi-year deals
Those together equal your Total RPO. This includes revenue you collected but haven’t earned yet, and revenue that is contractually committed but not yet invoiced.
That’s your future revenue runway.
♟ Real-world examples
It’s not just classic subscription companies using RPO. Usage-based leaders like Snowflake also disclose RPO. Snowflake defines their RPO as:
“Contracted future revenue not yet recognized, including deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods.”
That means even in consumption-based models, real contracted value exists and should be measured.
HubSpot, Salesforce, and other public SaaS leaders also spotlight RPO in their filings because smart operators know that forecasting future scale requires more than ARR alone.
♟ Why RPO must go up and to the right
Growing RPO reinforces:
• ★ Demand is strong
• ★ Customers are willing to commit
• ★ Revenue visibility is improving
• ★ Your SaaS business is becoming more durable
If you’re planning a future exit, fundraising, or simply trying to level up your internal reporting, RPO is a powerful addition to your metrics toolkit.
♟ Want to dig deeper?
I created a detailed blog post, a downloadable template, and a step-by-step walkthrough of a real public SaaS company so you can calculate RPO inside your own business. Look for the link in the show notes.
Thank you for watching this episode of SaaS Metrics School. Stay curious, keep measuring the metrics that matter, and I’ll see you in the next one!
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