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

> AI cloud companies announce contract numbers in the tens or hundreds of billions. Here is what remaining performance obligations, backlog, ARR and contract value each count, which ones are audited, and how a signed contract does or does not become cash for shareholders.

Source: https://www.exent.ai/resources/backlog-rpo-arr-explained · Reviewed by David, Senior Analyst, Exent · Published Oct 30, 2026 · Updated Oct 30, 2026

## Key takeaways

- RPO (remaining performance obligations) is the contracted revenue not yet recognized under US accounting rules (ASC 606) and is disclosed in financial-statement notes (annual statements are audited, while quarterly statements are generally unaudited); backlog is a company-defined measure that can include more; ARR is an annualized run rate, a speed rather than a total. None of them is cash.
- CoreWeave reported $103.7 billion of RPO and about $104 billion of revenue backlog at June 30, 2026; it expects 41% of the RPO to be recognized in the 24 months to June 2028 and the rest over months 25 to 78.
- ARR is defined differently by each company: Nebius multiplies the last month’s AI cloud revenue by 12 ($3.0 billion at June 30, 2026); IREN multiplies contracted GPU-hour prices by 8,760 hours ($1 billion operating, $4 billion contracted for 2026 capacity).
- Headline contract values often include options: TeraWulf’s Anthropic lease is about $19 billion over the base term and up to about $33 billion only if both extensions are exercised.
- Between a signed contract and cash for shareholders sit delivery, customer acceptance, capex, lenders paid first, interest and possible dilution. In the hypothetical below, moving the loan rate from 9% to 15% turns a $21.5 million five-year surplus into a $71.2 million shortfall.

## What is the difference between backlog, RPO and ARR?

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](https://www.exent.ai/resources/what-is-a-neocloud).

| Measure | Who defines it | What it counts | Audited? | Example (dated) |
| --- | --- | --- | --- | --- |
| Total contract value (TCV) | The company | Everything a contract could pay over its life, sometimes including options | No | Meta–Nebius: up to ~$27B (Mar 16, 2026) |
| Remaining performance obligations (RPO) | ASC 606 (US accounting standard) | Contracted revenue not yet recognized, billed or unbilled, adjusted for expected credits | Annual statements: audited; cited quarterly statements: unaudited | CoreWeave $103.7B; Oracle $664B |
| Revenue backlog | The company | RPO plus other amounts the company estimates it will earn under committed contracts | No | CoreWeave ~$104B (Jun 30, 2026) |
| Annualized run rate (ARR) | The company | Current revenue speed x 12 months or x 8,760 hours | No | Nebius $3.0B; IREN $1B operating |
| Contracted ARR / contracted lease revenue | The company | Run rate or lease value of capacity signed but not yet delivered | No | IREN $4B for 2026 capacity; Applied Digital ~$36B |
| Deferred revenue | Accounting (balance sheet) | Cash already received for service not yet delivered, a liability | Annual statements: audited; cited quarterly statements: unaudited | CoreWeave $9.7B (Jun 30, 2026) |
| Active vs contracted power (MW) | The company | Capacity running today vs capacity signed for; definitions of MW differ | No | CoreWeave 1.5 GW active, ~3.7 GW contracted |

## What is RPO in finance, and what does it leave out?

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.

## Why can backlog be bigger than RPO?

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](https://www.exent.ai/compare/neocloud-stocks-compared).

## How is ARR calculated, and why do companies’ ARR differ?

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”.

| Company | How ARR is defined | ARR figure | GAAP revenue for comparison |
| --- | --- | --- | --- |
| [Nebius](https://www.exent.ai/stocks/nbis) | Last month’s AI cloud revenue x 12 | $3.0B (Jun 30, 2026) | $582.3M in Q2 2026 |
| IREN | GPU-hour price of commissioned, contracted GPUs x 8,760 | $1B operating (Aug 26, 2026); $4B contracted for 2026 capacity | $707.0M in FY26, of which $128.8M AI cloud |

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.

## What do “up to” and “with extensions” contract values mean?

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:

| Deal | Firm part | Headline maximum | What is optional |
| --- | --- | --- | --- |
| TeraWulf–Anthropic, 20-year lease (Aug 5, 2026) | ~$19B over the initial term | ~$33B | Two five-year extensions, at Anthropic’s choice |
| Applied Digital leases, ~1.41 GW (Aug 31, 2026) | ~$36B over base terms | ~$86B | All renewal options exercised |
| Nebius–Meta, five years (Mar 16, 2026) | $12B of dedicated capacity from early 2027 | Up to ~$27B | Up to $15B of further capacity, which Nebius intends to sell to other customers first, with Meta buying what remains |

## How does contracted backlog become cash available to shareholders?

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.

**From signed contract to shareholder cash**

1. Sign:
- Take-or-pay contract (counted in RPO and backlog)
- Prepayment (CoreWeave 15–25% of TCV)

2. Build:
- GPUs, servers, data center (CoreWeave H1 2026 capex $14.1B)
- GPU-backed loan (secured on the contract)

3. Deliver:
- Delivery and acceptance (revenue starts; delays push it out)

4. Collect and pay out:
- Lender paid first (interest and amortization)
- Power, rent, staff
- Shareholders (what is left, after dilution)

Flows:
- Take-or-pay contract → GPU-backed loan: contract pledged as collateral
- Prepayment → GPUs, servers, data center: pays part of the build
- GPU-backed loan → Delivery and acceptance: capacity built with borrowed money
- Delivery and acceptance → Lender paid first: customer payments go here first
- Delivery and acceptance → Power, rent, staff: running costs
- Delivery and acceptance → Shareholders: excess cash released

*Simplified sequence for a GPU cloud. A landlord follows the same order with a building instead of GPUs.*

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.

| Step ($ millions, 5 years) | Base: loan at 9% | Loan at 15% | 9%, but 10% of revenue lost to delays and credits |
| --- | --- | --- | --- |
| Customer cash, incl. the prepayment | 1,000.0 | 1,000.0 | 900.0 |
| Capex | −600.0 | −600.0 | −600.0 |
| Loan received | +450.0 | +450.0 | +450.0 |
| Loan payments: 450 x r / (1 − (1 + r)^−5), x 5 years | −578.5 (115.7 a year) | −671.2 (134.2 a year) | −578.5 |
| Running costs (25% of $1,000M contract) | −250.0 | −250.0 | −250.0 |
| Left for shareholders over five years | +21.5 | −71.2 | −78.5 |

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](https://www.exent.ai/resources/coreweave-debt-explained). Dilution is the last step: convertible notes can become shares (see [stock dilution](https://www.exent.ai/resources/stock-dilution-and-stock-based-compensation)).

## When are contract numbers misleading, and when are they solid?

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](https://www.exent.ai/resources/who-are-coreweaves-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.

- Limitations: all figures are as reported in filings and releases dated Mar 16 to Oct 7, 2026; RPO and backlog change every quarter and will be restated in Q3 2026 reports (November 2026).
- Backlog, ARR, contracted ARR and lease values are company-defined and not audited; compare them only within one company over time.
- The worked example is a hypothetical illustration with round assumptions; it ignores taxes, the time value of money, residual GPU value and refinancing.
- Payback and per-megawatt figures are company estimates, not reported results.

## Add market context with Exent Market intel

Market intel provides market context, cross-asset analysis, an events calendar and regular written notes. These can inform your review of an existing plan; they do not reliably predict crashes or guarantee better outcomes.

1. An events calendar with earnings dates, Fed meetings and macro releases, so you know when the next RPO and backlog figures arrive.
2. Regular written notes that read cross-asset ratios such as stocks vs bonds and high-beta vs low-volatility stocks, the backdrop that decides how much the market pays for distant contract revenue.
3. A reading of US market risk (Risk ON, Neutral or Risk OFF) built on four pillars, with an email when the reading changes.

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## Frequently asked questions

### What is RPO in finance?

RPO, or remaining performance obligations, is the contracted revenue a company has not yet recognized, disclosed under the US accounting standard ASC 606 with an estimate of when it will be earned. CoreWeave reported $103.7 billion at June 30, 2026.

### Is backlog the same as future revenue?

Not exactly. Backlog is a company-defined estimate of revenue under signed contracts, subject to delivering the capacity; it can shrink through credits, delays or customer resale rights, and it is not cash.

### What is the difference between RPO and backlog?

RPO follows accounting rules and appears in the financial-statement notes (audited annually, generally unaudited in quarterly reports); backlog is the company’s own measure and can add estimates RPO excludes. At CoreWeave they were almost equal at June 30, 2026: $103.7 billion of RPO and about $104 billion of backlog.

### What does contracted ARR mean?

It is the annual revenue speed of capacity that is signed but not yet running. IREN reported $4 billion of contracted ARR for 2026 capacity against $1 billion of operating ARR on August 26, 2026.

### How much of CoreWeave’s backlog will be recognized in the next two years?

CoreWeave expects 41% of its $103.7 billion of RPO to be recognized in the 24 months to June 30, 2028, 39% in months 25 to 48 and the rest in months 49 to 78 (10-Q, June 30, 2026).

### Does Oracle’s $664 billion RPO mean $664 billion of profit?

No. It is contracted revenue not yet recognized, before the cost of building and running the capacity. Oracle reported negative free cash flow of $5 billion in the same quarter to August 31, 2026.

### Why does Nebius’s ARR differ from its quarterly revenue times four?

Nebius multiplies only the last month of the quarter by 12. Because revenue grew during Q2 2026, that gave $3.0 billion of ARR, while four times the quarter’s $582.3 million revenue is about $2.3 billion.

### What is a take-or-pay contract?

A contract in which the customer pays for reserved capacity whether or not it uses it. CoreWeave says such committed contracts made up 98% of its Q2 2026 revenue and typically include a prepayment.

## Sources

1. [Form 10-Q for the quarter ended June 30, 2026](https://www.sec.gov/Archives/edgar/data/1769628/000176962826000366/crwv-20260630.htm) — CoreWeave (SEC), 2026-08-11
2. [CoreWeave Reports Strong Second Quarter 2026 Results](https://www.nasdaq.com/press-release/coreweave-reports-strong-second-quarter-2026-results-2026-08-11) — CoreWeave, 2026-08-11
3. [Oracle Q1 FY27 earnings release](https://www.oracle.com/news/announcement/q1fy27-earnings-release-2026-09-10/) — Oracle, 2026-09-10
4. [Letter to shareholders, Q2 2026 (Form 6-K, Exhibit 99.2)](https://www.sec.gov/Archives/edgar/data/1513845/000110465926094568/tm2622968d1_ex99-2.htm) — Nebius Group (SEC), 2026-08-12
5. [Nebius signs new AI infrastructure agreement with Meta](https://nebius.com/newsroom/nebius-signs-new-ai-infrastructure-agreement-with-meta) — Nebius, 2026-03-16
6. [IREN Reports FY26 Results](https://www.globenewswire.com/news-release/2026/08/27/3352401/0/en/iren-reports-fy26-results.html) — IREN, 2026-08-27
7. [TeraWulf Reports Second Quarter 2026 Results](https://investors.terawulf.com/news-events/press-releases/detail/144/terawulf-reports-second-quarter-2026-results) — TeraWulf, 2026-08-05
8. [Fiscal first quarter 2027 results (Form 8-K, Exhibit 99.1)](https://www.sec.gov/Archives/edgar/data/1144879/000114487926000057/0001144879-26-000057.txt) — Applied Digital (SEC), 2026-10-07

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Educational content, not investment advice. Past performance does not guarantee future results.