Revenue

3 Months Ended

Sep. 30, 2020

Revenue From Contract With Customer [Abstract]

Revenue

Note 3. Revenue

Contract Balances

The Company offers payment terms of more than one year for qualified customers and transactions in rare circumstances. At times, revenue recognition occurs before billing, resulting in an unbilled receivable, which represents a contract asset. The contract asset is a component of accounts receivable and other assets for the current and non-current portions, respectively.

Customer advances represent deposits from customers for shipments of systems. Deferred revenue balances represent active and non-active warranties and services, which are recognized based on contract terms. When the Company receives advances or deposits from customers before revenue is recognized, this results in a contract liability. It can take up to two and half years from the time of order to revenue recognition due to the Company’s long sales cycle.  

Changes in the contract assets and contract liabilities are as follows:

	September 30, 2020		June 30, 2020
(Dollars in thousands)	Amount		Amount
Contract Assets:
Unbilled accounts receivable – current (1)	$	12,093	$	11,739
Interest receivable – current (2)		583		493
Long-term accounts receivable (3)		3,429		3,810
Interest receivable – non-current (3)		1,286		1,342
Contract Liabilities:
Customer advances		16,712		22,571
Deferred revenue – current		81,344		83,207
Deferred revenue – non-current		24,406		24,125

(1) Included in accounts receivable on the Company’s consolidated balance sheet

(2) Included in prepaid expenses and other current assets on the Company’s consolidated balance sheet

(3) Included in other assets on the Company’s consolidated balance sheet

During the quarter ended September 30, 2020, contract assets changed primarily due changes in the timing of billings that occurred after revenues were recognized and changes in transactions with payment terms exceeding 12 months. Contract liabilities changed due to changes in the timing of recognition of revenue for system sales for which the warranty has not yet started and was deferred and due to changes in transaction price.

During the three months ended September 30, 2020 and 2019, the Company recognized revenues of $8.8 million, and $11.2 million, respectively, which were included in the deferred revenue balances at June 30, 2020 and 2019, respectively.

Remaining Performance Obligations

Remaining performance obligations represent deferred revenue from open contracts for which performance has already started and the transaction price from executed and non-cancellable contracts for which performance has not yet started. Service contracts in general are considered month-to-month contracts, and therefore, the Company has elected the practical expedient to not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.

As of September 30, 2020, total remaining performance obligations amounted to $984.9 million. Of this total amount, $78.7 million related to long-term warranty and service, which is expected to be recognized over the remaining warranty period for systems that have been delivered. For systems that have been delivered but not yet installed, management estimates the timing of installation since warranty starts upon installation.

The following table represents the Company's remaining performance obligations related to long-term warranty and service as of September 30, 2020 and the estimated revenue expected to be recognized:

	Fiscal years of revenue recognition
(Dollars in thousands)	2021		2022		2023		Thereafter
Long-term warranty and service	$	29,526	$	25,530	$	13,054	$	10,550

For the remaining $906.2 million of performance obligations, the Company estimates 21% to 28% will be recognized in the next 12 months, and the remaining portion will be recognized in the 30 months thereafter. The Company’s historical experience indicates that some of its customers will cancel or renegotiate contracts as economic conditions change or when product offerings change during the long sales cycle. Based on historical cancellations, approximately 23% of the Company’s contracts may never result in revenue due to cancellation.

The time bands reflect management’s best estimate of when the Company will transfer control to the customer and may change based on timing of shipment, readiness of customers’ facilities for installation, installation requirements, and availability of products.

Capitalized Contract Costs

The Company capitalizes and amortizes the incremental costs of obtaining a contract, primarily related to certain bonuses and sales commissions. The capitalized bonuses and sales commissions are amortized over a period of five years commencing upon the initial transfer of control of the system to the customer following the pattern of transfer of control of the performance obligations to the customer.

The balance of capitalized costs to obtain a contract was $7.4 million and $7.9 million as of September 30, 2020 and June 30, 2020, respectively. The Company has classified the capitalized costs to obtain a contract as a component of prepaid expenses and other current assets and other assets with respect to the current and non-current portions of capitalized costs, respectively, on the consolidated balance sheets. During the three months period ended September 30, 2020 and 2019, the Company recognized $0.7 million and $0.5 million, respectively in expense related to the amortization of the capitalized contract costs. Included in the amortization expense, the Company booked $0.1 million in impairment loss for each of the three month period ended September 30, 2020 and 2019, respectively.