Net Bookings
Financials
Industry:
Sector Agnostic
Short Definition
Net Bookings is Gross Bookings minus standard reductions like cancellations, refunds, or churn, giving a clear view of committed revenue after accounting for typical losses. It focuses on the sustainable portion of those commitments.
Short Definition
Net Bookings is Gross Bookings minus standard reductions like cancellations, refunds, or churn, giving a clear view of committed revenue after accounting for typical losses. It focuses on the sustainable portion of those commitments.
Short Definition
Net Bookings is Gross Bookings minus standard reductions like cancellations, refunds, or churn, giving a clear view of committed revenue after accounting for typical losses. It focuses on the sustainable portion of those commitments.
Why it matters for Investors
Better forecast: Closer to what will turn into revenue/cash later.
Health check: The gap vs. gross shows breakage (churn/returns).
Efficiency: Use net (not gross) against sales/marketing spend to judge effectiveness.
Why it matters for Investors
Better forecast: Closer to what will turn into revenue/cash later.
Health check: The gap vs. gross shows breakage (churn/returns).
Efficiency: Use net (not gross) against sales/marketing spend to judge effectiveness.
Why it matters for Investors
Better forecast: Closer to what will turn into revenue/cash later.
Health check: The gap vs. gross shows breakage (churn/returns).
Efficiency: Use net (not gross) against sales/marketing spend to judge effectiveness.
Formula
Practical considerations:
When to count: Bookings on the signature/order date; reductions when the loss takes effect (not when notice is given).
What to count: Include signed new, expansion, and renewal deals in gross; subtract full cancels, returns/voids, and downsizes that became effective this period.
Price basis: Use contracted price after discounts; exclude taxes and uncommitted usage/overage.
SaaS vs. transactions: SaaS reductions = churn/downsizes; commerce/marketplaces = returns/voids.
Show both views: Always report Gross and Net side-by-side; the spread is your risk signal.
Formula
Practical considerations:
When to count: Bookings on the signature/order date; reductions when the loss takes effect (not when notice is given).
What to count: Include signed new, expansion, and renewal deals in gross; subtract full cancels, returns/voids, and downsizes that became effective this period.
Price basis: Use contracted price after discounts; exclude taxes and uncommitted usage/overage.
SaaS vs. transactions: SaaS reductions = churn/downsizes; commerce/marketplaces = returns/voids.
Show both views: Always report Gross and Net side-by-side; the spread is your risk signal.
Formula
Practical considerations:
When to count: Bookings on the signature/order date; reductions when the loss takes effect (not when notice is given).
What to count: Include signed new, expansion, and renewal deals in gross; subtract full cancels, returns/voids, and downsizes that became effective this period.
Price basis: Use contracted price after discounts; exclude taxes and uncommitted usage/overage.
SaaS vs. transactions: SaaS reductions = churn/downsizes; commerce/marketplaces = returns/voids.
Show both views: Always report Gross and Net side-by-side; the spread is your risk signal.
Worked Example
Gross Bookings signed in March
Item | Type | Committed value ($) | Notes |
|---|---|---|---|
A | New subscription ($2,000 MRR × 24 mo) + $3,000 setup | $51,000 | $48,000 term + $3,000 setup |
B | Services project (fixed) | $15,000 | Annual commitment |
C | Order bundle | $45,000 | Includes $5,000 fulfillment fee |
Gross Bookings (March) | $111,000 |
Reductions recognized in March
Reduction | Effective date | Amount ($) | Notes |
|---|---|---|---|
Cancel B (services) | Mar 29 | $15,000 | Full cancellation |
Partial return on C | Mar 25 | $5,000 | Return/void |
Downsize A (cut 6 months of term) | Mar 31 | $12,000 | $2,000 × 6 months |
Total reductions (March) | $32,000 |
Net Bookings (March) = $111,000 − $32,000 = $79,000
Notes:
Timing: Book at sign; remove value when the loss starts.
Not revenue/billings: Net Bookings is adjusted commitments, not cash or GAAP revenue.
Breakout: Show New vs. Expansion vs. Renewal inside gross, then subtract reductions to get net.
Worked Example
Gross Bookings signed in March
Item | Type | Committed value ($) | Notes |
|---|---|---|---|
A | New subscription ($2,000 MRR × 24 mo) + $3,000 setup | $51,000 | $48,000 term + $3,000 setup |
B | Services project (fixed) | $15,000 | Annual commitment |
C | Order bundle | $45,000 | Includes $5,000 fulfillment fee |
Gross Bookings (March) | $111,000 |
Reductions recognized in March
Reduction | Effective date | Amount ($) | Notes |
|---|---|---|---|
Cancel B (services) | Mar 29 | $15,000 | Full cancellation |
Partial return on C | Mar 25 | $5,000 | Return/void |
Downsize A (cut 6 months of term) | Mar 31 | $12,000 | $2,000 × 6 months |
Total reductions (March) | $32,000 |
Net Bookings (March) = $111,000 − $32,000 = $79,000
Notes:
Timing: Book at sign; remove value when the loss starts.
Not revenue/billings: Net Bookings is adjusted commitments, not cash or GAAP revenue.
Breakout: Show New vs. Expansion vs. Renewal inside gross, then subtract reductions to get net.
Worked Example
Gross Bookings signed in March
Item | Type | Committed value ($) | Notes |
|---|---|---|---|
A | New subscription ($2,000 MRR × 24 mo) + $3,000 setup | $51,000 | $48,000 term + $3,000 setup |
B | Services project (fixed) | $15,000 | Annual commitment |
C | Order bundle | $45,000 | Includes $5,000 fulfillment fee |
Gross Bookings (March) | $111,000 |
Reductions recognized in March
Reduction | Effective date | Amount ($) | Notes |
|---|---|---|---|
Cancel B (services) | Mar 29 | $15,000 | Full cancellation |
Partial return on C | Mar 25 | $5,000 | Return/void |
Downsize A (cut 6 months of term) | Mar 31 | $12,000 | $2,000 × 6 months |
Total reductions (March) | $32,000 |
Net Bookings (March) = $111,000 − $32,000 = $79,000
Notes:
Timing: Book at sign; remove value when the loss starts.
Not revenue/billings: Net Bookings is adjusted commitments, not cash or GAAP revenue.
Breakout: Show New vs. Expansion vs. Renewal inside gross, then subtract reductions to get net.
Best Practices
Report both views: Always show Gross and Net side-by-side; the gap is your breakage (cancels/returns/downsizes).
Classify clearly: Split gross into New / Expansion / Renewal; track reductions by Cancel / Return/Void / Downsize with a reason code.
Time it right: Use signature date for gross; use effective loss date for reductions (not notice date).
Normalize multi-year: Store both TCV (total) and ACV (annual). Use ACV for period comparisons.
Price basis: Use contracted, post-discount, pre-tax values; exclude uncommitted usage/overage.
Reconcile monthly: Tie CRM ↔ billing/invoicing ↔ General Ledger; sample deals to prevent double counting.
Forecast from net: Apply historical gross→net conversion to project revenue/cash and set targets.
Segment & monitor: View by channel, segment, region, rep; alert on rising reduction rates.
Industry Tips:
SaaS: Track ACV/TCV per deal; reductions = effective downsizes/churn only; keep a separate CARR list for signed-not-live.
Commerce/Marketplaces: Include returns/voids in reductions; keep GMV separate from bookings; fraud/chargebacks = reductions.
Services/Hardware: Book on signed Statement of Work/ Purchase Order; reductions = cancels/change-order scope cuts; note ship/milestone dependencies
Best Practices
Report both views: Always show Gross and Net side-by-side; the gap is your breakage (cancels/returns/downsizes).
Classify clearly: Split gross into New / Expansion / Renewal; track reductions by Cancel / Return/Void / Downsize with a reason code.
Time it right: Use signature date for gross; use effective loss date for reductions (not notice date).
Normalize multi-year: Store both TCV (total) and ACV (annual). Use ACV for period comparisons.
Price basis: Use contracted, post-discount, pre-tax values; exclude uncommitted usage/overage.
Reconcile monthly: Tie CRM ↔ billing/invoicing ↔ General Ledger; sample deals to prevent double counting.
Forecast from net: Apply historical gross→net conversion to project revenue/cash and set targets.
Segment & monitor: View by channel, segment, region, rep; alert on rising reduction rates.
Industry Tips:
SaaS: Track ACV/TCV per deal; reductions = effective downsizes/churn only; keep a separate CARR list for signed-not-live.
Commerce/Marketplaces: Include returns/voids in reductions; keep GMV separate from bookings; fraud/chargebacks = reductions.
Services/Hardware: Book on signed Statement of Work/ Purchase Order; reductions = cancels/change-order scope cuts; note ship/milestone dependencies
Best Practices
Report both views: Always show Gross and Net side-by-side; the gap is your breakage (cancels/returns/downsizes).
Classify clearly: Split gross into New / Expansion / Renewal; track reductions by Cancel / Return/Void / Downsize with a reason code.
Time it right: Use signature date for gross; use effective loss date for reductions (not notice date).
Normalize multi-year: Store both TCV (total) and ACV (annual). Use ACV for period comparisons.
Price basis: Use contracted, post-discount, pre-tax values; exclude uncommitted usage/overage.
Reconcile monthly: Tie CRM ↔ billing/invoicing ↔ General Ledger; sample deals to prevent double counting.
Forecast from net: Apply historical gross→net conversion to project revenue/cash and set targets.
Segment & monitor: View by channel, segment, region, rep; alert on rising reduction rates.
Industry Tips:
SaaS: Track ACV/TCV per deal; reductions = effective downsizes/churn only; keep a separate CARR list for signed-not-live.
Commerce/Marketplaces: Include returns/voids in reductions; keep GMV separate from bookings; fraud/chargebacks = reductions.
Services/Hardware: Book on signed Statement of Work/ Purchase Order; reductions = cancels/change-order scope cuts; note ship/milestone dependencies
FAQs
Net vs. Gross Bookings?
Net subtracts in-period losses; gross is all signed value.Can Net Bookings be negative?
Yes—if reductions exceed gross in the period.Do commissions/fees reduce Net Bookings?
No—those hit margin later, not bookings.How is this different from revenue/billings?
Bookings = signed value; billings = invoiced cash; revenue = earned under accounting rules.
FAQs
Net vs. Gross Bookings?
Net subtracts in-period losses; gross is all signed value.Can Net Bookings be negative?
Yes—if reductions exceed gross in the period.Do commissions/fees reduce Net Bookings?
No—those hit margin later, not bookings.How is this different from revenue/billings?
Bookings = signed value; billings = invoiced cash; revenue = earned under accounting rules.
FAQs
Net vs. Gross Bookings?
Net subtracts in-period losses; gross is all signed value.Can Net Bookings be negative?
Yes—if reductions exceed gross in the period.Do commissions/fees reduce Net Bookings?
No—those hit margin later, not bookings.How is this different from revenue/billings?
Bookings = signed value; billings = invoiced cash; revenue = earned under accounting rules.
Related Metrics
Commonly mistaken for:
Gross Bookings (Total booked value, not net)
Net Revenue (May include additional income, not just bookings)
Total Payment Volume (TPV) (Focuses on processed payments, not net bookings)
Related Metrics
Commonly mistaken for:
Gross Bookings (Total booked value, not net)
Net Revenue (May include additional income, not just bookings)
Total Payment Volume (TPV) (Focuses on processed payments, not net bookings)
Related Metrics
Commonly mistaken for:
Gross Bookings (Total booked value, not net)
Net Revenue (May include additional income, not just bookings)
Total Payment Volume (TPV) (Focuses on processed payments, not net bookings)
Source of:
Components:
Index