That’s not the way it works. Google still recognizes the revenue. The cost of goods sold and gross profit are what get hit here but it’s no different than any other partner than can sell their product through the Google marketplace and take advantage of committed spend.
reply“Reported to shareholders” doesn’t really mean anything. There are thousands of such line items on financial reports. The ones that matter, such as recognized revenue, don’t count future bookings. It is understood that customers renege on these commitments all the time.
replyGoogle is simply telling customers - there’s a new Google Cloud service, and you can use it under your existing account.
Let's not quite right... you don't recognize revenue in a consumption business until the usage actually happened
replypretty sure that's what the "spend commitment" changes. It's a "use it or lose it" agreement. It's as good as a debt the moment it is signed, used or not.
replyGAAP does not permit booking contracted future revenue onto the balance sheet or income statement, because the spend is not actually an unconditional debt until the service has been rendered.
replyIt doesn't matter if it's committed or not, it still won't be recognized on the formal financial statements.
I think they declare it as pipeline revenue or something instead of current year revenue
replyRPO remaining performance obligations (not on balance sheet) unless prepaid then its deferred revenue (balance sheet). When it’s consumed it is recognized as revenue.
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