Few Learnings regarding the revenue recognition and terms used by the company
- Realizable value : is a current estimation of the amount of the money the company should ideally be receiving from the existing customer (already made signups) in next one qtr/year. This value, they keep back testing with their historical data. So basically it’s an estimate and mostly given in a range than absolute value.
- Deferred revenue : Whatever money that comes in from customer is deferred revenue. A part of that gets recognized as actual revenue in coming quarters. So, if a customer paid, say 24,000/- for annual subscription, then the whole 24,000/- becomes part of deferred revenue. Each passing day, as the service is rendered the 24,000/365 becomes part of the operating revenue reported for the quarter numbers.
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