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The Revenue Waterfall answers: when will the revenue we’ve invoiced actually be earned? It takes amounts you’ve billed and lays out, period by period, how they release into recognized revenue. It’s the clearest view of how a single annual invoice turns into twelve months of revenue.

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Booked revenue

Booked revenue is the amount of the invoices before tax and before any applicable discounts. It’s the gross pre-tax value of what you billed, and it’s the starting point of every waterfall row. The waterfall is organized as a cohort by booking month. Each cohort groups everything booked in a given month, then tracks that booked amount across periods:
  • When it’s recognized: reading across the period columns shows how the cohort’s booked revenue is earned over time, period by period, until it’s fully recognized.
  • Fully recognized: the point where the cohort’s release schedule sums back to its booked amount, with nothing left to earn.
  • What remains deferred as of now: the portion of the cohort still sitting in deferred revenue today, waiting to be earned in future periods.
So a single cohort tells you three things at a glance: how much you booked that month, how much of it you’ve already earned and when, and how much is still deferred right now.

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When to use it

  • Forecasting recognized revenue from contracts you’ve already invoiced.
  • Explaining to finance why this month’s recognized revenue differs from this month’s billings.
  • Auditing how a specific invoice spreads across periods.

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Who uses it

Finance and RevOps doing revenue forecasting and audit.

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Main fields

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How to read it

Each row is a source of revenue. Reading left to right across the period columns shows how that amount is recognized over time. The columns add up to the full pre-tax amount invoiced.

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Example

A $1,200 annual subscription invoiced in advance on January 1, released monthly across the year (each month’s figure is the sum of that month’s daily recognition). January and March each have 31 days, February 28, so their monthly figures differ slightly even though the daily rate is constant. The row sums to $1,200.

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Relationship to other reports

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Limitations to keep in mind

  • The waterfall reflects what’s been invoiced and recognized. It isn’t a forecast of future bookings.
  • Figures are pre-tax.
  • Contra-revenue events (credit notes, voids) adjust the schedule in the period they occur.