Revenue waterfall Beta

Learn how to understand the revenue waterfall.

The revenue waterfall offers unique insights into the current state of monthly recognized and deferred revenue. You can select the month range that revenue was billed and select the month up to which monthly recognized revenue is shown.

For example, the waterfall below shows the revenue that was billed from April 2020 to May 2020 and monthly recognized revenue up to the end of June 2020:

Revenue waterfall

From the waterfall above, the total of 2,000,000 USD in revenue was billed on April 2020. Out of 2,000,000 USD, the amount of 400,000 USD was recognized in May 2020. At the end of June 2020, 1,100,000 USD has been recognized, and there was 900,000 USD remaining in deferred revenue.

Billed revenue

The Billed column in the waterfall report shows the total billed revenue by month. The billed revenue of a month is the total amount of revenue generated by invoices finalized in that month. Below is a single invoice that generates 50 USD in revenue:

An invoice that generates 50 USD in revenue

Billed revenue is not necessarily equal to the invoiced amount. For example, below is an invoice whose billed revenue of 19 USD is lower than the invoiced amount of 20.90 USD because of tax:

An invoice with tax

Another example is an invoice whose total amount is negative but billed revenue is positive because a customer downgraded from an expensive plan:

An invoice that generates 31 USD in revenue, but its total amount is -17 USD

The billed revenue of the invoice above is 31 USD, even though its total amount is -17 USD.

Looking at the invoice’s line items, you can see that the customer downgraded from the 124 USD Luxurious monthly plan to the 31 USD Basic monthly plan on March 16 at 00:00:00 UTC. Since the customer previously paid 124 USD for Luxurious monthly plan for March, the amount on each plan is prorated. The unused 16 days of the previous plan and the remaining 16 days of the new plan resulted in a 48 USD credit, which is applied to the invoice.

Negative recognized revenue

It’s uncommon for a month to have a negative recognized revenue amount, but it can happen with a large amount of contra revenue.

For example, below is an invoice for a monthly subscription that was finalized on March 20th, cost 310,000 USD, and was refunded in June. If you look at the revenue and contra revenue summary after June ends, you’ll see:

Account Mar 2019 Apr 2019 May 2019 Jun 2019
Revenue +110,000 +200,000
DeferredRevenue +200,000 -200,000
Refunds -310,000

Since the revenue waterfall shows the current state of recognized and deferred revenue, the total recognized revenue in June might be negative due to -310,000 USD.

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