Simple definitions for overcomplicated terms.
Definition
What is Forward Revenue? Definition, Formula & Examples
Dec 18, 2025
What is Forward Revenue?
Forward revenue is a financial metric used to estimate the amount of income a company expects to receive in future periods. Unlike historical revenue, which tells you what happened yesterday, forward revenue tries to tell you what will happen tomorrow based on current contracts, projected sales, and market trends.
In the world of SaaS and B2B sales, it is essentially your financial forecast. It combines the revenue you have already locked in (but haven’t recognized yet) with the revenue you are highly likely to close.
In Plain English
Think of Annual Recurring Revenue (ARR) as the cash currently in your wallet. It is real, it is there, and you can count it.
Forward Revenue is more like your paycheck that is coming in two weeks—plus that bonus you are 90% sure you’re going to get. It is not in your bank account yet, so you can’t spend it, but you can certainly plan your budget around it.
If ARR is a snapshot of the present, Forward Revenue is a movie trailer for your future growth.
The Formula: How to Calculate It
While accountants might make this look like rocket science, the pragmatic formula for a sales leader is relatively straightforward. You are essentially weighing what you have against what you expect to lose and gain.
The Basic Formula:
Forward Revenue = (Recurring Revenue from Current Contracts) + (Weighted Pipeline Value) - (Expected Churn)
Recurring Revenue: The baseline subscription fees you are already collecting.
Weighted Pipeline Value: The total value of deals in your pipeline multiplied by their probability of closing (e.g., a $10k deal at the proposal stage might have a 40% weight, adding $4k to your projection).
Expected Churn: The percentage of revenue you anticipate losing based on historical retention rates.
Forward Revenue vs. ARR: What’s the Difference?
These two get confused often, but the distinction is critical for strategy.
Metric | Focus | Best Used For... |
|---|---|---|
ARR (Annual Recurring Revenue) | The Present | Measuring current health and valuation. |
Forward Revenue | The Future | Strategic planning, hiring, and setting sales quotas. |
ARR tells investors what you are worth today. Forward Revenue tells your board (and your team) if you are actually going to hit your end-of-year targets.
Why Sales Teams Should Care
Forward revenue isn’t just a number for the finance department to obsess over; it is a sanity check for your sales strategy. If your forward revenue looks weak, it means one of two things:
Your pipeline is too small: You need more volume at the top of the funnel.
Your data is bad: You are filling your pipeline with low-intent leads that won’t close, inflating your weighted value artificially.
This is where modern outbound comes in. To make forward revenue reliable, you need high-quality inputs. Using tools like Topo to automate prospecting ensures that the leads entering your formula are actually qualified based on real intent signals—not just guesses.
When you trust your data, you can trust your forecast. And when you trust your forecast, you can sleep a little better at night.