Booking
BOOK-ing
A signed deal. The total value of a customer contract at the time they commit to buy. Not the same as revenue.
A deal closes. The customer signs a contract. That is a booking. Here is where it gets tricky. A booking is not the same as revenue. If a customer signs a three-year, $300k contract today, you booked $300k. But you have not earned that money yet. You will recognize it as revenue over the life of the contract.
Bookings measure what you sold. Revenue measures what you earned. This distinction matters because you can book a lot of business and still run out of cash if the revenue comes in slowly. It also matters because sales teams are usually compensated on bookings, not revenue. They close the deal. Someone else has to deliver the value.
When someone says "we booked $10M this quarter," they mean $10M in total contract value was signed. The company may only recognize $2M of that as revenue in the same quarter depending on the contract structure and accounting rules.
Examples
A customer signs a multi-year contract.
Three-year deal, $300k total. Bookings: $300k. ACV: $100k. Revenue recognized in the first month: roughly $8,333. Same deal, three very different numbers.
End-of-quarter sales push.
The team books $5M in Q4. But $3M of that is multi-year deals with annual payment terms. Cash collected in Q4 is only $1.5M. The CFO is tracking revenue recognition, not bookings.
Sales compensation discussion.
A rep closes a $500k three-year deal. They get commission on the full $500k booking. But the company recognizes $167k per year. The rep and the CFO see the same deal very differently.
In practice
Read more on the blog
Frequently asked questions
Why are bookings and revenue different?
Bookings are the total value committed when a contract is signed. Revenue is recognized over the contract term according to accounting rules (ASC 606). A $120k annual contract creates $120k in bookings immediately but only $10k in revenue per month. This is why a company can have strong bookings and still face cash flow challenges.
Related terms
Income recognized according to accounting rules. What you actually earned, not what you sold or contracted.
The annualized value of a single customer contract. Tells you about individual deal size, while ASP tells you the average across all deals.
The annualized value of your active subscription contracts. The heartbeat metric of every SaaS business.
The total dollar value of a contract over its entire term, including subscription fees, services, and one-time charges.
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