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Significant Concentrations
12 Months Ended
Dec. 31, 2019
Risks And Uncertainties [Abstract]  
Significant Concentrations

13.

Significant Concentrations

Significant customer

Honeywell International, Inc. and affiliated entities (“Honeywell”) accounted for revenue and accounts receivable as follows (in thousands, except percentages):

 

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

Honeywell revenue

 

$

1,737

 

 

$

7,013

 

As a percentage of total revenue

 

 

3

%

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Honeywell accounts receivable

 

$

1,223

 

 

$

2,758

 

As a percentage of total accounts receivable

 

 

13

%

 

 

24

%

 

No other customer accounted for 10% or more of total revenue in 2019 or 2018 or 10% or more of total accounts receivable at December 31, 2019 or 2018.

Significant supplier

Effective March 1, 2019, pursuant to a Global Partnership Agreement with Microsoft, we are authorized to sell Windows IoT operating systems in Canada, the United States, Argentina, Brazil, Chile, Mexico, Peru, Venezuela, Puerto Rico, Columbia, and several Caribbean countries. Of our total revenue, 79% in 2019 and 75% in 2018 resulted from the sale of Windows IoT operating systems. Our existing distribution agreement for sales of Windows IoT operating systems in the European Union (“E.U.”), the European Free Trade Association, Turkey and Africa, expired on June 30, 2019 and was not renewed thereafter. We generated approximately 3% of our Partner Solutions software sales under this agreement in 2019. We have also entered into ODAs with Microsoft pursuant to which we are licensed to sell Microsoft Windows Mobile operating systems to customers in North America, South America, Central America (excluding Cuba), Japan, Taiwan, Europe, the Middle East, and Africa. The ODAs to sell Windows Mobile operating systems are effective through April 30, 2022.

Software sales under these agreements constitute a significant portion of our software revenue and total revenue. There is no automatic renewal provision in any of these agreements, and these agreements can be terminated unilaterally by Microsoft at any time.

Microsoft currently offers a rebate program to sell Microsoft Windows IoT operating systems pursuant to which we earn money for achieving certain predefined objectives. In accordance with Microsoft rebate program rules, we allocate 20% and 30% of rebates in 2019 and 2018, respectively, to reduce cost of sales, with the remaining 80% in 2019 and 70% in 2018 used to offset qualified marketing expenses in the period the expenditures are claimed and approved.

Under this rebate program, we recorded rebate credits as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2019

 

 

2018

 

Reductions to cost of revenue

 

$

314

 

 

$

718

 

Reductions to marketing expense

 

$

1,217

 

 

$

682

 

 

There was a balance of approximately $1.0 million in outstanding rebate credits for which we qualified as of December 31, 2019. If qualified program expenditures are made, these will be accounted for as reductions in marketing expense in the period in which such expenditures are made.