Financials
Deferred revenue
Cash collected before revenue has been earned under accounting rules.
What it means
Deferred revenue is recorded as a liability because the company still owes goods or services. It is common in subscriptions, maintenance contracts, and prepaid service models.
Example
An annual software subscription paid upfront can create deferred revenue that is recognized over the service period.
What not to infer
Deferred revenue is not profit and does not guarantee future retention or margin.