REVOPS TRAINING

Bookings

The total value of contracts signed in a period, regardless of when revenue is recognised or cash collected.

Three different questions

Bookings, revenue, ARR
MeasureAnswersTiming
BookingsWhat did we sign this period?Point of signature
RevenueWhat did we deliver this period?As delivered, per accounting rules
ARRWhat is the recurring run rate right now?Snapshot

Source: Distinctions stated here

The substitution to watch for

A period containing one large multi-year deal will show bookings far above both revenue and ARR added. Reported as growth without saying which measure it is, that reads as a step change in the business when it is a step change in contract length.

Reporting it defensibly

  1. State gross or net. The gap is churn and contraction, and it is the more interesting half.

  2. Separate recurring from one-off. Services bookings behave nothing like subscription bookings.

  3. State the term. Bookings without contract length cannot be compared across periods.

  4. Report ARR movement alongside, so run rate and signature activity are both visible.

RELATED TERMS

Annual Recurring Revenue (ARR)

The annualised value of recurring subscription revenue at a point in time. A run rate, not a measure of revenue earned during a period.

Net New ARR

The change in ARR over a period: new plus expansion minus contraction minus churn. The headline growth number.

Average Contract Value (ACV)

The annualised value of a contract, averaged across a set of deals. The standard unit for comparing new business.

COMMON QUESTIONS

What is the difference between bookings and revenue?
Bookings are what was contracted in a period; revenue is what is recognised as delivered. A three-year deal signed today is booked now and recognised over three years.
What is the difference between bookings and ARR?
Bookings are a period flow including one-off fees; ARR is a point-in-time recurring run rate. A large services component makes bookings much larger than the ARR added.
What are gross versus net bookings?
Gross counts everything signed. Net subtracts churn and contraction in the same period. Quoting gross where net is expected overstates growth, and the difference widens as the base grows.
Why do bookings and revenue diverge?
Term length, billing timing and services mix. All three shift the gap without anything changing about the business, which is why they should never be used interchangeably.

FURTHER READING

MRR vs ARR: Which to Use and How Both Get Inflated

They are the same quantity at different resolutions. The errors that inflate them are identical, consistent, and always in the same direction.

Learn how to apply this: RevOps 101: Revenue Operations Foundations

Definitions are the vocabulary. The courses are where you learn to operate it, with the interactive audit tools.

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