Bookings, Billings and Revenue: Dissecting and Discussing These Key Metrics

For businesses operating in the software landscape (specifically those with a software-as-a-service delivery model), there are a plethora of relevant metrics to differentiate between and monitor. The challenges of monitoring these metrics are not unique to any one company — I (and probably many of you readers) have witnessed both large, public companies, as well as smaller, private entities, deal with reporting struggles. This is due to the fact that all companies must always ensure financial reporting for both internal and external purposes is understandable, consistent and positions them to receive the most value from investors.

One particular challenge that software companies face is the proper disclosure of bookings, billings and revenue. As we will expand upon in this article, it is important to truly understand the differences between the three metrics. By doing so, companies can properly position these key datapoints to internal and external stakeholders without creating a laundry list of follow-up questions and/or concerns.

Back to the Basics: A Comparison of Bookings, Billings and Revenue

Before digging into some best practices and common challenges in reporting these metrics, it is helpful first to understand the fundamental differences between bookings, billings and revenue. Bookings are the lifeblood of growth and expansion for companies, as they represent the total economic…