Definition
A three-year contract signed today is a booking today, billed annually, and recognized as revenue month by month. Each number answers a different question: sales momentum, cash timing and earned performance.
Formula
Bookings, billings, revenueRevenue recognized = Billings − Change in deferred revenue
Example
A $360,000 three-year contract billed annually: $360,000 of bookings at signing, $120,000 billed each year, $10,000 of revenue each month.
Benchmarks
Report all three when annual or multi-year contracts are common, and never call bookings revenue.
Common mistakes
- Putting bookings in a revenue chart.
- Counting future-year billings in runway.
Examples use Demo Co, a fictional $3M ARR SaaS company, or a generic company where noted. Benchmarks are common reference points, not targets for every business.