Billings
BIL-ings
The total amount invoiced to customers in a period. Revenue plus the change in deferred revenue. A leading indicator of future recognized revenue.
Billings is the total amount you invoiced customers during a period. It differs from revenue (what you recognized) and bookings (what you contracted). Billings captures what you actually billed, whether the customer has paid yet or not.
The formula: Billings = Revenue + Change in Deferred Revenue. If you recognized $10M in revenue and deferred revenue grew by $3M, billings were $13M. The $3M represents invoices sent for future service that have not been recognized yet.
Billings matter because they are a leading indicator. If billings grow faster than revenue, it means you are signing contracts faster than you are recognizing them. Future revenue will be higher. If billings grow slower than revenue, you are burning through your deferred revenue backlog. Future revenue growth will slow.
Examples
Calculating billings from financial statements.
Q4 revenue: $25M. Deferred revenue at end of Q4: $40M. Deferred revenue at end of Q3: $35M. Change in deferred revenue: +$5M. Q4 billings: $25M + $5M = $30M. Billings exceeded revenue by $5M, meaning the company is adding contracts faster than it is recognizing them.
Billings as a growth predictor.
A company's billings grew 45% year-over-year while revenue grew 35%. The 10-point gap suggests revenue growth will accelerate in the coming quarters as deferred revenue converts. Analysts use this gap to predict future revenue beats.
A seasonal billings pattern.
An enterprise SaaS company bills heavily in Q4 (budget season) and Q1. Q4 billings: $40M. Q1 billings: $25M. Q2 billings: $20M. Q3 billings: $18M. Revenue is smooth ($25M/quarter) because deferred revenue amortizes evenly. Billings are lumpy. Revenue is steady.
In practice
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Frequently asked questions
What is the difference between billings and bookings?
Bookings is the total contract value when a deal is signed. Billings is what gets invoiced in a period. A 3-year, $300k deal is $300k in bookings when signed. If billed annually, it generates $100k in billings in year one. Bookings measures sales activity. Billings measures invoicing activity.
Why do analysts care about billings?
Because billings are a leading indicator of future revenue. Revenue recognition smooths out contract timing. Billings shows the raw pace of new business. If billings growth accelerates, revenue growth will follow. If billings decelerate, revenue growth will slow in the coming quarters.
Related terms
The accounting rules for when you can count revenue as earned. Not when you sign the deal or collect the cash, but when you deliver the service.
Cash collected for services not yet delivered. A liability on the balance sheet that converts to revenue as you fulfill the contract.
Bookings is what you sold (total contract value when signed). Revenue is what you earned (recognized over the delivery period). They are never the same number.
The total value of contracted revenue not yet recognized. Includes deferred revenue plus unbilled contracted amounts. A measure of future revenue visibility.
The annualized value of your active subscription contracts. The heartbeat metric of every SaaS business.
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