Term · Business Model & Operating KPIs
Backlog (Order Backlog)
In briefThe order backlog is the value of contractually committed orders not yet recognised as revenue. For industrially oriented small caps, it can indicate future business development better than current quarterly revenue.
Definition
The order backlog is the value of contractually agreed customer orders not yet realised as revenue. Scope and inclusion criteria are frequently issuer-specific.
How it is calculated
Formula. Typically: the value of contractual orders not yet fulfilled as of the reporting date. Check cancellability, price adjustments, term and revenue recognition separately.
Why it matters for small caps
For industrial small caps, the backlog can be more meaningful than short-term revenues.
Common misreadings
- The order backlog is equated with certain future revenue. Cancellations, project delays, variable prices and long fulfilment periods can limit its meaningfulness.
In the process
Frequently asked
What is an order backlog?
It comprises a company's contractually agreed customer orders still open as of the reporting date. Which orders are included is usually determined by the issuer itself.
How do you read a backlog correctly?
You examine scope, term and revenue recognition separately and pay attention to how robust the orders are. This allows you to estimate which portion will reliably translate into future revenue.
Why is a high backlog not the same as certain revenue?
Cancellations, project delays and variable prices can qualify the reported value. A large order backlog therefore guarantees no future earnings.
Related terms
Sources
Primary
ESMA – Guidelines on Alternative Performance Measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
Methodology
IFRS Foundation – IFRS 15 Revenue from Contracts with Customers
https://www.ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-from-contracts-with-customers/
https://www.ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-from-contracts-with-customers/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.