financial-metrics
Revenue is income from the ordinary activities of the business — under IFRS 15, the consideration earned as performance obligations to customers are satisfied. It is not cash collected, bookings, or ARR.
Under IFRS 15 (and the aligned US ASC 606 model), revenue is recognised when the entity transfers control of a promised good or service, at the amount it expects to be entitled to. That can be over time (a long project) or at a point in time (a product shipment).
So revenue is not:
IAS 1 presents revenue as the starting point of profit or loss. “Turnover” in UK Companies Act language is the same economic idea with local labelling.
There is no single algebraic trick. Practically:
Revenue = Σ (transaction price allocated to performance obligations satisfied in the period)
minus estimated refunds, rebates and variable consideration constraints.
Illustration only. Hypothetical industrial software vendor, calendar year.
| Concept | Amount | What it is |
|---|---|---|
| New ACV signed | €6.0m | Commercial bookings |
| Year-end ARR | €14.0m | Contracted run-rate |
| IFRS 15 revenue | €12.2m | Performance delivered, including professional services |
| Cash from customers | €11.4m | Collections |
A revenue multiple on €12.2m and an ARR multiple on €14.0m are different sentences. Diligence must say which one the letter of intent used.
Growth in revenue is only as good as the quality of the contracts underneath: concentration, remaining performance obligations, channel stuffing, bill-and-hold, and agent vs principal presentation (gross vs net).
Statutory accounts; VAT and tax bases in many jurisdictions; CAGR in teasers; top-line diligence in commercial due diligence.
Revenue can be “correct” under IFRS and still a poor proxy for economic activity (principal vs agent, pass-through energy, construction over time). It says nothing about gross margin or cash.
Dazur asks companies to map IFRS revenue, billings and recurring run-rate as separate fields. Valuation models that blur those three produce multiples that cannot be compared with precedent transactions.