Deferred Revenue Unwind
The mechanical decline in the deferred revenue balance-sheet line as previously prepaid services are delivered and the unearned amount is recognized as revenue. When bookings refill the pool at the same rate the unwind drains it, deferred revenue stays roughly flat and the income statement recognition remains durable. When bookings slow below the unwind rate, the pool drains and future-period revenue mechanically declines because the prepaid backlog being drawn from is shrinking. A 25 percent year-over-year decline in deferred revenue ahead of an unchanged-headline-growth quarter is one of the strongest leading indicators that headline revenue will roll over in the following two to four quarters.
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Related terms
Accounts Payable · Adjusted EBITDA · Adjusted EBITDA Ex-SBC · ADR · ARPU · Average Length Of Stay
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