1/5/2024 0 Comments Splunk revenue 2018Thus, the remaining performance obligation that ASC 606 requires to be disclosed in the notes to the company's financial statements equals the deferred revenue balance of $1,800, plus the revenue backlog of $225, for a total RPO of $2,025. Since nine out of 12 months remain in the business year, the company has a revenue backlog of $225 ($25 multiplied by 9) arising from the support contract. The company will also record $75 of support services on its income statement for the three completed and paid months. The remaining $1,800 of services, which has been billed but not earned, can be found on the deferred revenue account on the balance sheet. Separately, the customer agrees to be billed $25 on the first day of each month (with the transaction to be paid automatically via credit card) for the duration of the one-year support contract.Īfter the first three months, representing one business quarter, the SaaS company will record one-fourth of the $2,400 cloud service, or $600, as revenue on its income statement. Suppose the customer prepays the full year's worth of the cloud service in the amount of $2,400. To get a grip on this new metric, let's consider the basic example of a generic SaaS company that sells a cloud service and a related support contract to a customer, both for a one-year period. For cloud-based SaaS organizations like Splunk, subscription services are often the most significant component of backlog. Backlog represents future performance obligations that haven't been invoiced. "Backlog," also known as "revenue backlog" in the world of software-as-a-service (SaaS) companies, isn't found on the face of the financial statements. So, it's an important item to consider when looking at all factors influencing future revenue. It exists as a liability on the balance sheet, because it represents money collected, or at least invoiced and due, in advance of the satisfaction of an obligation.ĭeferred revenue also can be thought of as revenue that will hit the income statement once performance of obligations is completed. Now, Conte is simplifying things somewhat for the analysts on the call, but it's nonetheless a pretty good, succinct working definition: RPO equals deferred revenue plus backlog.ĭeferred revenue, sometimes called unearned revenue, represents amounts that have been invoiced to a customer in advance of work being performed. Here's how Splunk CFO David Conte defined the remaining performance obligation during the company's May 24 fiscal Q1 2019 earnings callwith analysts: Among various guidelines that arise from the logic above, the new standard requires disclosure, in the notes to the financial statements, of a company's quarterly remaining performance obligations, or RPO.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |