Billings

Billings represent the total value of invoices a company sends to its customers during a specific period for services rendered or products delivered. It's a crucial metric, especially for subscription-based businesses, because it captures the total contractual commitment from customers in a period, regardless of when that money is actually “earned” as revenue. Think of it this way: when you pay for a full year's software subscription in January, the company bills you for the whole amount then. However, according to accounting principles, it can only recognize that payment as Revenue on its Income Statement month by month as it provides the service. Billings, therefore, offer a sneak peek into a company's future revenue pipeline. It's the total value of new business, renewals, and upgrades invoiced in a quarter or year, making it a powerful forward-looking indicator of a company’s sales momentum and overall financial health.

For an investor, particularly one with a long-term perspective, billings can be more insightful than revenue alone. While revenue tells you what a company has earned in the past, billings tell you what it expects to earn in the future. It's a direct measure of new business being signed.