Startup Finance

Remco Bloemen

Venture Capital

Revenue

A common mistake is to use bookings and revenue interchangeably, but they aren’t the same thing.

Bookings is the value of a contract between the company and the customer. It reflects a contractual obligation on the part of the customer to pay the company.

Revenue is recognized when the service is actually provided or ratably over the life of the subscription agreement. How and when revenue is recognized is governed by GAAP.

Letters of intent and verbal agreements are neither revenue nor bookings.

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