In business model analysis, it's critical to recognize that recurring revenue is not the equivalent of repeating revenue.
When revenue is recurring, the customer is a known entity. When revenue is repeating, the customer is either anonymous or "known" only to a computer program that sends out automated notices.
When revenue is recurring, its reappearance can be predicted with a high degree of confidence (≥95%). When revenue is repeating, it's not known when the customer will return, nor is it known how much the customer will spend upon his/her return.
Both dimensions must be present for the revenue to be classified recurring. If one or both conditions is absent, the revenue is repeating.
Cell phone providers like AT&T (NYSE: T) and Sprint Nextel (NYSE: S) enjoy contractually driven recurring revenues.
Companies like General Electric (NYSE: GE) that have established spare parts and maintenance programs for equipment they have sold the customer. These, too, are instances of recurring revenue.
Marketers frequently develop loyalty programs to bring customers back. These are almost always instances of repeating revenues, not recurring revenues.
AT&T's 10K filings are interesting reading as the company's newly found Chicken business is highly dependent upon its partner, Apple Computer.
General Electric's 10K filings are also interesting reading. One of the keys to the company's stock price surge in the 1990's was Jack Welch's discovery that "Services" was a massive Chicken business well within the company's reach. Compare the company's revenue streams in 1999 to 2008 and ask yourself: Does current CEO Jeffrey Immelt "get it" (i.e., does he understand Chickens and Pigs)?
