Revenue

6 Months Ended

Jun. 30, 2020

Revenue.

Revenue

Note 4. Revenue

To reflect the organization of our business operations, we divide revenue into two categories: revenue from sales of new systems and revenue arising from the sale of used systems, parts and labor to customers who own systems, which we refer to as “Aftermarket.”

Revenue by categories used by management are as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
	(in thousands)
Systems	$	76,815	$	37,224	$	159,152	$	94,316
Aftermarket		46,150		37,081		82,804		71,466
	$	122,965	$	74,305	$	241,956	$	165,782

We also consider revenue by geography. Revenue is allocated to geographic markets based upon the location to which our products are shipped and in which our services are performed. Revenue in our principal geographic markets is as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
	(in thousands)
North America	$	8,915	$	9,380	$	19,576	$	20,988
Asia Pacific		106,604		49,717		203,432		112,643
Europe		7,446		15,208		18,948		32,151
	$	122,965	$	74,305	$	241,956	$	165,782

Our system sales revenue transactions give rise to contract liabilities (in the case of pre-payments and the fair value of goods and services to be delivered after the system delivery, such as installation and certain warranty obligations).

Contract liabilities are as follows:

	June 30,		December 31,
	2020		2019
	(in thousands)
Contract liabilities	$	30,417	$	29,251

Contract liabilities are reflected as deferred revenue on the consolidated balance sheet and relate to payments invoiced or received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations.

	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
	(in thousands)
Balance, beginning of the period	$	34,106	$	20,481	$	29,251	$	22,584
Deferral of revenue		6,248		3,943		10,724		6,225
Recognition of deferred revenue		(9,937)		(10,344)		(9,558)		(14,729)
Balance, ending of the period	$	30,417	$	14,080	$	30,417	$	14,080

The majority of our system transactions have payment terms of 90% due upon shipment of the tool and 10% due upon acceptance. Aftermarket transaction payment terms usually provide that payment is due either within 30 or 60 days after the service is provided or parts delivered.