Revenue backlog is the portion of contracted revenue that is not yet recognized within a SaaS company's subscription agreement. Simply put, it is the money that a company's customers have promised to pay for a future product/service delivery. Knowing the revenue backlog can help companies get an accurate picture of their current and future financial state.
Suppose, a customer has agreed to a $1,000 subscription to be paid monthly for one year's service. On January 1, the company bills $100 for the first month. Thus, its revenue backlog will be $900. On February 1, as the fresh billing happens, the revenue backlog reduces to $800.