Backlog, RPO and ARR: How to Read AI Cloud Contract Numbers

RPO is a stock of contracted future revenue defined by accounting rules; backlog is the company’s own, usually wider, version of that stock; ARR is how fast revenue is coming in today, multiplied up to a year. If a number appears in the financial-statement notes under “remaining performance obligations”, it follows ASC 606; if it is called backlog, contracted revenue or ARR, read the company’s footnote, because each one is defined differently.

Scope: this guide covers how AI cloud companies (neoclouds), hyperscalers and data-center landlords report contracts, using their 2026 filings. It does not cover lease accounting in depth or software-company bookings. It is education, not a view on any stock; for the companies themselves start at what is a neocloud.

RPO is the revenue a company has a contract for but has not yet earned, as it must disclose under ASC 606, together with an estimate of when it will be recognized. CoreWeave’s 10-Q for the quarter ended June 30, 2026 reports $103.7 billion of unsatisfied RPO, including billed and unbilled amounts, and gives the timing: 41% over the 24 months to June 30, 2028, 39% in months 25 to 48 and the rest in months 49 to 78. It also says the figure is net of variable consideration such as expected credits under service-level terms, amounts that may not be recognized because of delivery delays, and capacity the customer has the right to resell.

A quick sense check, our arithmetic: 41% of $103.7 billion is about $42.5 billion over two years, or about $21 billion a year, against Q2 2026 revenue of $2.575 billion (about $10.3 billion a year at that pace). That only happens if CoreWeave turns much more of its roughly 3.7 GW of contracted power into running capacity; at June 30 it had 1.5 GW active. RPO tells you demand is signed; it does not tell you the capacity, financing and delivery are in place. Oracle reports the same measure at a far larger size, $664 billion at August 31, 2026, up $209 billion in a year, while its free cash flow was negative $5 billion in that quarter.

Because backlog is whatever the company defines it to be, and it usually adds estimates that the accounting standard does not allow in RPO. CoreWeave’s footnote says revenue backlog “includes remaining performance obligations, plus other amounts we estimate will be recognized as revenue in future periods under committed customer contracts,” subject to delivery and availability of service. At June 30, 2026 the two were almost the same (about $104 billion vs $103.7 billion). The release also says backlog excludes more than $25 billion of net new commitments signed in early Q3, Those commitments may increase the next reported backlog, alongside revenue recognition and other adjustments.

Landlords report a third kind of number: lease value. Applied Digital says its leases for about 1.41 GW of critical IT load represent about $36 billion of contracted revenue over the initial base terms, or about $86 billion if all renewal options are exercised (8-K, Oct 7, 2026). The $36 billion is the committed figure; the $86 billion depends on tenants choosing to stay. How these contract numbers line up across companies is in neocloud stocks compared.

ARR multiplies a current revenue speed up to a year, and each company chooses the speed. Nebius uses the last month of the quarter: AI cloud revenue for June 2026 times 12 gave $3.0 billion, against $582.3 million of revenue for the whole quarter (about $2.3 billion a year at the quarter’s average pace, because revenue grew during the quarter). IREN uses contracted GPU-hour prices times 8,760 hours, and its release warns that recognized revenue “may be materially lower”.

IREN’s $4 billion of contracted ARR is a target for capacity to be operating by December 31, 2026, subject to commissioning, testing and customer acceptance. Treat contracted ARR as a plan with signatures, and operating ARR as the speed actually reached.

They mean part of the headline number is optional. Read the release for three things: the firm base term, what the customer may choose to add, and what the provider may resell to someone else. Three dated examples:

Only after the capacity is built, delivered and accepted, the lenders who financed it are paid, and the costs of running it are covered; what is left belongs to shareholders, and new shares or convertibles can dilute it. The order matters because in a GPU-backed loan the customer’s payments go to the lender first: CoreWeave’s 10-Q describes its delayed-draw loans as secured by the financed assets and the pledged contractual cash flows, amortizing as those cash flows arrive, with the excess released to the company.

Worked example (hypothetical, not any company’s contract): a five-year, $1,000 million take-or-pay contract ($200 million a year), a 15% prepayment ($150 million, inside CoreWeave’s disclosed 15–25% range), $600 million of capex, a $450 million five-year amortizing loan for the rest, and running costs of 25% of revenue. Cash for shareholders is customer cash minus capex plus the loan minus loan payments minus running costs, before tax, undiscounted and with no value left in the GPUs.

The lesson is the sensitivity, not the totals: on these assumptions most of a $1 billion contract goes to the build, the lender and the running costs, and a higher loan rate or a delivery slip can wipe out the shareholders’ share. The surplus improves sharply if the GPUs can be re-rented after the contract (CoreWeave depreciates them over six years) or if prepayments are larger: Nebius says prepayments covered 50–60% of the capex on its Q2 2026 deals and estimates a payback of 1 year 10 months, a company estimate based on forecast costs. CoreWeave’s actual interest bill was $640 million in Q2 2026; why it pays what it pays is in CoreWeave’s debt explained. Dilution is the last step: convertible notes can become shares (see stock dilution).

They mislead when one customer dominates, when options are counted as if firm, and when the capacity to serve them does not exist yet. CoreWeave’s three largest customers were 36%, 26% and 10% of Q2 2026 revenue, so a large part of the backlog depends on a few counterparties (see who are CoreWeave’s customers). Counterexample, when they are solid: a take-or-pay contract with an investment-grade customer and a prepayment is strong enough for lenders to finance on investment-grade terms: IREN raised $3.6 billion of investment-grade GPU financing for its Microsoft contract at a weighted 6.0%, and CoreWeave’s own contract-backed loans range from an effective 7% (the 2026 facility) to 15% (the 2023 one). Lenders, in other words, price backlog by the customer and the contract behind it.