Deferred revenue, also called unearned revenue, is money customers have already paid for something still owed to them: a year of software, a prepaid subscription. It sits as a liability, but the obligation is to deliver, not to repay, making it the good kind of liability: customers funding the business in advance, the reverse of accounts receivable.
A large, growing balance is the hallmark of subscription businesses and a sign of strength. Customers pay up front, and the balance converts into future revenue as the company delivers, giving a preview of sales already banked.