Learn · Explainer
Order backlog
Firm orders not yet delivered: funded vs. unfunded backlog, how it differs from remaining performance obligations, and figures from Lockheed Martin, Caterpillar and RTX.
The short answer
Order backlog is the dollar amount of firm orders a company has not yet delivered or performed. Industrial and defense companies have long published it as a sign of work already booked. The definition is not uniform: some 10-Ks count only funded orders, some include unfunded firm orders, and some now treat backlog as the same thing as remaining performance obligations.
A defense example: Lockheed Martin
Lockheed Martin's 10-K for 2025 reports backlog of $193.6 billion at December 31, 2025, compared with $176.0 billion a year earlier. It says backlog is converted into sales in future periods as work is performed or deliveries are made, and that it expects to recognize approximately 37% of the backlog over the next 12 months and about 60% over the next 24 months. The backlog includes both funded orders, for which funding has been authorized and appropriated by the customer, and unfunded firm orders, for which funding has not been appropriated. Funded backlog was $120.2 billion at year-end 2025. Lockheed Martin does not include unexercised options or potential orders under indefinite-delivery, indefinite-quantity agreements.
Source: Lockheed Martin 10-K for fiscal 2025, filed Jan 29, 2026
An industrial example: Caterpillar
Caterpillar's 10-K for 2025 reports the dollar amount of backlog believed to be firm at approximately $51.2 billion at December 31, 2025 and $30.0 billion a year earlier, with the increase across its primary segments and the largest increase in Power & Energy. Of the year-end 2025 backlog, approximately $19.3 billion was not expected to be filled in 2026. "Believed to be firm" is the usual industrial wording: these are orders the company considers firm, not a guess at future demand.
Source: Caterpillar 10-K for fiscal 2025, filed Feb 13, 2026
Backlog and remaining performance obligations
The two ideas overlap, but they are not always the same. Remaining performance obligations is the ASC 606 figure for contracted revenue not yet recognized, used across industries, especially software and services. Backlog is the older operating term in manufacturing and defense. RTX's 10-K for 2025 says its backlog is equivalent to its remaining performance obligations for its sales contracts: the aggregate dollar value of firm orders for which products have not been provided or service has not been performed, excluding unexercised options and potential orders under ordering-type contracts. When a company says that, the two figures can be read as one. When it does not, the notes will define what is in and what is out.
A rising backlog can mean more work has been booked, or that deliveries have slowed. The useful questions are the definition, the funded share, and how much the company expects to convert in the next year.
Common questions
What is order backlog?
The dollar value of firm orders a company has received but not yet delivered or performed. Defense and industrial companies usually report it in Item 1 or the MD&A of the 10-K.
What is funded vs. unfunded backlog?
Funded backlog has had money authorized and appropriated by the customer, often a government. Unfunded backlog is a firm order that has not yet been appropriated. Lockheed Martin reports both, and a funded subtotal.
Is backlog the same as remaining performance obligations?
Sometimes. RTX says its backlog is equivalent to its RPO. Other companies, including Lockheed Martin, use a defense-industry definition that splits funded and unfunded orders and excludes IDIQ options.
Does a larger backlog mean higher future profit?
Not by itself. Backlog is unfilled orders, not profit. Some of it may be cancelled, repriced or delayed, and the mix of contracts changes the margin.
Where do I find it?
In Item 1 (Business) or the MD&A, sometimes also in a revenue note. The company should define what it includes.
Disclosures
- Editor holdings
- The editor holds no position in any company named on this page. As of Nov 11, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Nov 10, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
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