1. A private equity analyst is evaluating a SaaS company, CloudSync, which offers subscription-based cloud storage services. The analyst needs to understand the company’s financial performance, particularly focusing on the concept of “Bookings” and its relationship with revenue recognition.

Which of the following statements accurately describes what “Bookings” represents for a SaaS business like CloudSync and how it is related to revenue recognition?

A) Bookings refer to the total value of contracts signed in a given period, and it is recognized as revenue immediately upon signing the contract.

B) Bookings represent the cash collected from customers, and it is spread out and recognized as revenue over the life of the subscription.

C) Bookings are the total value of contracts signed in a given period, and revenue is recognized proportionally over the contract term as the service is delivered.

D) Bookings signify the revenue recognized when the service is delivered, irrespective of when the contract is signed or payment is received.

Which of the following statements accurately describes the difference between ACV and TCV and their relationship in the context of SaaS subscription contracts?

A) TCV is the annualized value of a subscription contract for customers paying on a monthly basis, while ACV represents the total contract value for annual subscribers.

B) ACV represents the total value of a subscription contract, while TCV is the value of the contract normalized to an annual basis.

C) ACV and TCV are synonymous, both representing the total value of a subscription contract over its lifetime.

D) ACV is the value of the subscription contract for a single year, while TCV represents the total value of the contract over its entire term.