Revenue

9 Months Ended

Sep. 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				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(in thousands)
Systems	$	70,239	$	36,809	$	229,391	$	131,124
Aftermarket		40,166		32,644		122,970		104,111
	$	110,405	$	69,453	$	352,361	$	235,235

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				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(in thousands)
North America	$	9,022	$	7,681	$	28,598	$	28,670
Asia Pacific		89,995		47,756		293,427		160,398
Europe		11,388		14,016		30,336		46,167
	$	110,405	$	69,453	$	352,361	$	235,235

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:

	September 30,		December 31,
	2020		2019
	(in thousands)
Contract liabilities	$	16,969	$	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				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(in thousands)
Balance, beginning of the period	$	30,416	$	14,080	$	29,251	$	22,584
Deferral of revenue		4,030		17,254		10,320		20,887
Recognition of deferred revenue		(17,477)		(3,893)		(22,602)		(16,030)
Balance, ending of the period	$	16,969	$	27,441	$	16,969	$	27,441

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.