Billings
Sector Deep DivesWhat a company invoiced in the period, approximated by revenue plus the movement in deferred revenue.
Also written: calculated billings, invoiced revenue
Billings sit between bookings and revenue. Bookings are what was signed, revenue is what was earned, and billings are what was actually invoiced, which is what drives the cash coming in.
Most companies do not disclose billings directly, so analysts reconstruct them as revenue plus the increase in deferred revenue over the period. The approximation is good but not exact: acquisitions, currency translation and contract assets all move the deferred balance for reasons that have nothing to do with invoicing.
The number is highly sensitive to invoicing terms, which are a commercial choice rather than an economic fact. Shifting customers from annual upfront to quarterly invoicing depresses billings and the deferred balance for a full year while leaving contracts, revenue and customer behaviour unchanged. Pushing multi year prepayments does the reverse and cannot repeat.
So billings are useful as a cash and demand signal, and dangerous as a growth rate. Ask whether invoicing terms changed before drawing a conclusion from either direction.
Worked example
Revenue for the period is €30,000 and deferred revenue rises from zero to €90,000. Billings are approximately €120,000, which is the invoice the customer received.
The following year the company moves that customer to quarterly invoicing. Billings for the year fall toward €120,000 spread across four invoices and the deferred balance shrinks, while the contract and the revenue are identical.