What is revenue?
Revenue is the top line of the income statement — the consideration earned from delivering goods or services to customers, recognised under IFRS 15 (and US GAAP ASC 606) using the five-step model: identify the contract, identify performance obligations, determine the transaction price, allocate the price, and recognise revenue as obligations are satisfied.
Revenue vs. related concepts
- Revenue vs. bookings: bookings is the total contract value signed in a period; revenue is what’s recognised that period as the obligations are met.
- Revenue vs. recurring revenue (ARR / MRR): recurring revenue is the subscription portion annualised or monthlyised; GAAP revenue is the period figure including one-time items.
- Revenue vs. cash collected: revenue follows performance; cash follows the payment schedule. The gap shows up in deferred revenue and accounts receivable.
- Revenue vs. net sales: net sales subtracts returns, allowances and discounts; revenue is the audited top line in most filings.
Recognition rules that bite founders
- SaaS subscription: recognised rateably over the service period — not at the date of invoice.
- Implementation fees: often deferred and amortised over the customer’s expected life if they are not a distinct performance obligation.
- Reseller and platform sales: the principal-vs-agent test under IFRS 15 / ASC 606 decides whether you report gross or net of the partner’s share — a frequent restatement trigger.
- Variable consideration: rebates, refunds and milestone payments are estimated and constrained to amounts highly probable not to reverse.
Practical implications
Revenue is the metric outsiders judge you on, but inside the company recurring revenue and bookings are typically more decision-useful for operating cadence.
Do: maintain a revenue policy document mapping each product line to the IFRS 15 five-step model; reconcile monthly.
Don’t: conflate bookings, ARR and GAAP revenue in a pitch deck — investors expect a clean reconciliation in DD.