# Bookings

## Quick Definition

The total value of new contracts signed in a period, representing committed future revenue regardless of when it will be recognized.

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## What is Bookings?

Bookings represent the total value of new contracts signed during a period. When a customer signs a deal, it's a booking. The money hasn't arrived yet, and you can't recognize it as revenue, but you have a contractual commitment.

Bookings are a leading indicator of future revenue. Strong bookings today mean strong revenue in the coming months. Weak bookings signal trouble ahead, even if current revenue looks healthy.

## Why Bookings Matter

Bookings reveal sales momentum before it shows up in revenue. A company can have great revenue from past deals while new bookings collapse. By the time revenue drops, it's too late to fix the sales problem.

Investors track bookings closely during due diligence. They want to see consistent or growing bookings, not a business coasting on old contracts.

## Types of Bookings

- **New Bookings:** First-time customer contracts.
- **Renewal Bookings:** Existing customers re-signing.
- **Expansion Bookings:** Upsells and add-ons.

Each type tells a different story about business health.

### Formula

- **Total Bookings** = New Contract Value + Renewal Contract Value + Expansion Contract Value
- **Booking to Revenue Ratio** = Bookings ÷ Revenue (should be near 1.0 for steady state)

### Example

Q4 bookings breakdown:

- New customer contracts: $400,000
- Renewals: $600,000
- Expansions: $150,000

**Total Bookings** = $1,150,000

If Q4 revenue was $1,000,000, your bookings-to-revenue ratio of 1.15 indicates healthy growth momentum.

## Related Terms

### [Billings]  
The amount invoiced to customers in a period, representing cash that will be collected regardless of revenue recognition timing.

### [ARR (Annual Recurring Revenue)]  
The total value of recurring revenue normalized to a one-year period, calculated by multiplying MRR by 12.

### [TCV (Total Contract Value)]  
The total revenue value of a customer contract over its full term, including all recurring and one-time fees.

## Learn More About Bookings

### [Finance SaaS Revenue Recognition and ASC 606: A Practical Guide for Founders]  
ASC 606 determines when and how SaaS companies recognize revenue. This guide covers the five-step framework, common SaaS scenarios, and how to avoid the mistakes that delay fundraising.

### [Finance ACV vs ARR vs TCV vs MRR: SaaS Revenue Metrics Explained]  
Learn the difference between ACV, ARR, TCV, and MRR. Formulas, examples, and a stage-by-stage guide to which SaaS revenue metrics matter most.

### [Finance Understanding ARR and MRR: The Foundation of SaaS Financial Health]  
Learn the difference between ARR and MRR, how to calculate them, and which metric matters most for your SaaS business growth strategy. Master recurring revenue.