Revenue

9 Months Ended

Sep. 28, 2024

Revenue from Contract with Customer [Abstract]

Revenue

3. Revenue

The following tables represent a disaggregation of revenue from contracts with customers for the three and nine months ended September 28, 2024 and September 30, 2023.

Major Products and Service Lines

	Three Months Ended		Three Months Ended
	September 28, 2024		September 30, 2023
	(In thousands)
	HDD		HDD		ASP		Total
Systems, upgrades and spare parts	$	11,833	$	16,033	$	6	$	16,039
Field service		1,318		1,335		97		1,432
Cancellation fee		15,354		444		—		444
Total net revenues	$	28,505	$	17,812	$	103	$	17,915

	Nine Months Ended		Nine Months Ended
	September 28, 2024		September 30, 2023
			(In thousands)
	HDD		HDD		PV		ASP		Total
Systems, upgrades and spare parts	$	33,004	$	35,901	$	28	$	17	$	35,946
Field service		4,304		3,271		—		97		3,368
Cancellation fee		15,354		444		—		—		444
Total net revenues	$	52,662	$	39,616	$	28	$	114	$	39,758

Primary Geographical Markets

	Three Months Ended				Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
	(In thousands)
United States	$	1,716	$	784	$	2,376	$	3,060
Asia		26,789		17,034		50,286		36,590
Europe		—		97		—		108
Total net revenues	$	28,505	$	17,915	$	52,662	$	39,758

Timing of Revenue Recognition

	Three Months Ended				Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
	(In thousands)
Products transferred at a point in time	$	28,077	$	17,915	$	52,234	$	39,758
Products and services transferred over time		428		—		428		—
Total net revenues	$	28,505	$	17,915	$	52,662	$	39,758

The following table reflects the changes in our contract assets, which we classify as accounts receivable, unbilled or retainage, and our contract liabilities, which we classify as deferred revenue and customer advances, for the nine months ended September 30, 2023.

	September 28 2024		December 30, 2023		Nine Months Change
	(In thousands)
Contract assets:
Accounts receivable, unbilled	$	3,194	$	393	$	2,801
Contract liabilities:
Deferred revenue	$	416	$	376	$	40
Customer advances		7,773		21,889		(14,116	)
	$	8,189	$	22,265	$	(14,076	)

Accounts receivable, unbilled represents a contract asset for revenue that has been recognized in advance of billing the customer. For our system and certain upgrade sales, our customers generally pay in three installments, with a portion of the system price billed upon receipt of an order, a portion of the price billed upon shipment, and the balance of the price due upon completion of installation and acceptance of the system at the customer’s factory. Accounts receivable, unbilled generally represents the balance of the system price that is due upon completion of installation and acceptance, less the amount that has been deferred as revenue for the performance of the installation tasks. During the nine months ended September 28, 2024, contract assets increased by $2.8 million primarily due to the sale of upgrades and spare parts sold to a customer as of September 28, 2024.

Customer advances generally represent a contract liability for amounts billed to the customer prior to transferring goods. The Company has elected to use the practical expedient to disregard the effect of the time value of money in a significant financing component when its payment terms are less than one year. These customer advances are liquidated when revenue is recognized. Deferred revenue generally represents a contract liability for amounts billed to a customer for completed systems at the customer site that are undergoing installation and acceptance testing where transfer of control has not yet occurred as Intevac does not yet have a demonstrated history of meeting the acceptance criteria upon the customer’s receipt of product. During the nine months ended September 28, 2024, we recognized revenue of $17.1 million and $163,000 that was included in customer advances and deferred revenue, respectively, at the beginning of the period.

In May 2023, the Company received notice of the cancellation of a $54.6 million order for eight 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and, accordingly, the Company removed the order from backlog. The customer contract associated with the cancelled order requires the customer to pay the Company a prorated price based upon the percentage of work completed on the order. The Company has received customer advances in the amount of $19.1 million associated with the cancelled order, all of which will be utilized to settle this customer obligation. During the three and nine months ended September 28, 2024, the Company applied $15.4 million of billings against these advances in connection with the customer accepting ownership of certain inventory on-hand and reimbursing us for supplier cancellation and inventory management costs incurred. In addition, the Company has agreed to provide custodial services for this customer-owned inventory at a third-party warehouse until December 31, 2025. During the three and nine months ended September 30, 2023, the Company applied $444,000 of billings against these advances in connection with inventory scrapped at the customer’s direction. In December 2023, the Company received notice of the cancellation of a $11.4 million order for two 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and, accordingly, the Company removed the order from backlog. The Company has not received any customer advances associated with the cancelled order.

On September 28, 2024, we had $44.4 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 21.4% of our remaining performance obligations as revenue in 2024 and 78.6% in 2025.