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Bookings vs. Billings in a SaaS Company, r1.

2
(From scratch build-up in order to demonstrate key relationships)

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16


Starting ARR 2.0 4.0 6.3 8.9 12.0 15.3
New ARR bookings 2.0 2.3 2.6 3.0 3.5 4.0
Churn ARR - - - - 0.2 0.2
Ending ARR 4.0 6.3 8.9 12.0 15.3 19.1
Net New ARR 2.0 2.3 2.6 3.0 3.3 3.8

Available to Renew (ATR) - - - - 2.0 2.3


Renewal bookings - - - - 1.8 2.1
Total subscription bookings 2.0 2.3 2.6 3.0 5.3 6.1

Revenue - 1.0 1.6 2.2 3.0 3.8

Deferred Revenue (DR) 2.0 3.8 5.4 6.7 9.5 12.2


DR from this qtr 2.0 2.3 2.6 3.0 5.3 6.1
DR from 1 qtr ago - 1.5 1.7 2.0 2.3 4.0
DR from 2 qtr ago - - 1.0 1.2 1.3 1.5
DR from 3 qtr ago - - - 0.5 0.6 0.7

Change in DR - 1.8 1.6 1.3 2.8 2.8


Revenue + change in DR - 2.8 3.1 3.5 5.8 6.6

Drivers Assumptions
Churn rate of 10% All deals, both new and renewal, are on
Sales starting at 2.0 per quarter Every order comes on the last day of th
Growing at 15% QoQ Thus revenue (Qn+1) = ending ARR (Qn

Copyright Kellblog by Dave Kellogg, under a Creative Commons Attribution-NonCommercial 4.0 International License
3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
19.1 23.4 28.5 34.0 40.5 47.9
4.6 5.3 6.1 7.0 8.1 9.3
0.3 0.3 0.5 0.6 0.7 0.8
23.4 28.5 34.0 40.5 47.9 56.4
4.4 5.0 5.6 6.4 7.4 8.5

2.6 3.0 5.3 6.1 7.0 8.1


2.4 2.7 4.8 5.5 6.3 7.3
7.0 8.1 10.9 12.5 14.4 16.6

4.8 5.9 7.1 8.5 10.1 12.0

15.0 17.7 22.0 26.5 31.2 36.3


7.0 8.1 10.9 12.5 14.4 16.6
4.6 5.3 6.0 8.2 9.4 10.8
2.6 3.0 3.5 4.0 5.4 6.3
0.8 1.3 1.5 1.8 2.0 2.7

2.7 2.7 4.3 4.5 4.8 5.1


7.5 8.6 11.4 13.0 14.9 17.1

both new and renewal, are one year in duration and prepaid
er comes on the last day of the quarter (so no in-quarter revenue from any booking)
nue (Qn+1) = ending ARR (Qn) / 4

ercial 4.0 International License


Comment
ARR balance at start of period
New ARR bookings adding during period
Churn ARR lost during period

Bookings up for renewal


Applying churn rate to the previous line
New plus renewal subscription bookings

Note that ending ARR (Qn) = 4 * revenue (Qn+1)

"Billings"

rom any booking)

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