Bookings

Bookings represent the total value of all contracts signed by customers within a specific period. It is a forward-looking metric that measures a sales team's success in securing new business and expansion commitments before any revenue is recognized. Unlike revenue or billings, bookings reflect the moment a customer contractually agrees to pay for a product or service, making it a primary indicator of sales performance and future growth.

Components of Bookings

Bookings are typically tracked quarterly and are a core measure of quota attainment for sales teams. The total bookings figure for a period includes several types of commitments that contribute to company growth:

• New Bookings: Contracts signed with brand new customers.
• Expansion Bookings: Additional value from existing customers, generated through upselling to a higher-tier plan or cross-selling new products.
• Renewal Bookings: The value of existing customer contracts that are renewed for another term.

For subscription businesses, bookings are often measured as an Annual Contract Value (ACV) to normalize and compare deals with different contract lengths.

Bookings vs. Revenue

The distinction between bookings and revenue is critical for financial forecasting and accounting. Bookings are a commitment, while revenue is earned over time as the service is delivered according to accounting standards.

For example, if a customer signs a two-year contract worth $240,000, the company records a $240,000 booking in the quarter the deal is signed. However, the Annual Recurring Revenue (ARR) for that deal is $120,000, and the recognized revenue might be only $10,000 per month. This makes bookings a leading indicator of future revenue. The Revenue Operations team uses booking data to build accurate revenue forecasts and manage the company’s financial health.