Cash received is not revenue earned

About this episode

Patrick McKenzie discusses the complexities of revenue recognition in software, particularly in SaaS and AI contexts.

Patrick McKenzie (patio11) reads his classic Bits about Money essay explaining why revenue recognition in software is more complicated than most engineers, founders, and financial reporters think. The essay covers the accounting rules behind SaaS subscriptions, the deferred revenue problem that surprised him when he sold his own companies, and the surprisingly intricate standards governing virtual goods in mobile games. He then turns to AI labs, where rapid revenue growth has prompted questions about whether the numbers mean what they seem. They mostly do, but understanding why requires knowing the difference between bookings, deferred revenue, and a minimum commit. – Full transcript available here: www.complexsystemspodcast.com/cash-received-is-not-revenue-earned/ – Presenting Sponsors: Mercury & Granola Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com . If meetings consistently leave you with hazy action items and lost context, Granola handles the…

People in this episode

Host: Patrick McKenzie

Topics covered

• revenue recognition
• SaaS subscriptions
• deferred revenue
• AI labs
• accounting standards
• virtual goods

Keywords

• revenue recognition
• SaaS
• deferred revenue
• AI revenue growth
• accounting rules
• virtual goods
• financial reporting

Sponsors

Mercury, Granola

Mentioned in this episode

Books & works: Bits about Money, Accounting for SaaS and swords

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