Bookings
The total value of new contracts signed in a period, regardless of when revenue is recognized.
Definition
Bookings represent the total dollar value of new contracts and renewals signed in a given period. A booking occurs when a customer signs a contract, even if the service has not started yet and no revenue has been recognized. Bookings are a leading indicator of future revenue and ARR growth. They include new bookings, expansion bookings, and renewal bookings.
Why it matters
Bookings are the earliest signal of revenue growth. If bookings are growing faster than ARR, the company is likely accelerating. If bookings slow, revenue growth will follow. Watch bookings trends in all-hands updates.
Example
In Q1, a company signs 10 new annual contracts worth $1M total and 5 expansion contracts worth $300K. Total bookings for Q1 are $1.3M. This ARR will be recognized over the next 12 months.