Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Note 9. Revenue from Contracts with Customers

Product and Product-Related Services Revenue

The Company had product and product-related services revenue consisting of revenue from the sale of instruments and consumables and the use of the HTG EdgeSeq proprietary technology to process samples and design custom RUO assays for the three and six months ended June 30, 2022 and 2021 as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Product revenue:
Instrument	$	177,812	$	397,205	$	370,998	$	621,218
Consumables		830,255		867,970		1,301,469		1,472,352
Total product revenue		1,008,067		1,265,175		1,672,467		2,093,570
Product-related services revenue:
Custom RUO assay design		—		—		—		48,350
RUO sample processing		483,515		809,029		1,003,569		1,367,430
Total product-related services revenue		483,515		809,029		1,003,569		1,415,780
Total product and product-related services revenue	$	1,491,582	$	2,074,204	$	2,676,036	$	3,509,350

As the Company’s agreements for product and product-related services revenue have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

Sale of Instruments and Consumables

The delivery of each instrument and the related installation and calibration are considered to be a single performance obligation, as the HTG EdgeSeq instrument must be professionally installed and calibrated prior to use. Instrument product revenue is generally recognized upon installation and calibration of the instrument by field service engineers, which represents the point at which the customer has the ability to use the instrument and has accepted the asset. Installation generally occurs within one month of instrument shipment.

The delivery of each consumable is a separate performance obligation. Consumables revenue is recognized upon transfer of control, which represents the point when the customer has legal title and the significant risks of ownership of the asset. The Company’s standard terms and conditions provide that no right of return exists for instruments and consumables, unless replacement is necessary due to delivery of defective or damaged product. Customer payment terms vary but are typically between 30 and 90 days of revenue being earned from shipment or delivery, as applicable.

The Company provides instruments to certain customers under reagent rental agreements. Under these agreements, the Company installs an instrument in the customer’s facility without a fee and the customer agrees to purchase consumable products at a stated price over the term of the agreement; in some instances, the agreements do not contain a minimum purchase requirement. Terms range from several months to multiple years and may automatically renew in several month or multiple year increments unless either party notifies the other in advance that the agreement will not renew. The Company measures progress toward complete satisfaction of this performance obligation to provide the instrument and deliver the consumables using an output method based on the number of consumables delivered in relation to the total consumables to be provided under the reagent rental agreement. This is considered to be representative of the delivery of outputs under the arrangement and the best measure of progress because the customer benefits from the instrument only in conjunction with the consumables. The Company expects to recover the cost of the instrument under the agreement through the fees charged for consumables, to the extent sold, over the term of the agreement.

RUO Sample Processing

The Company also provides sample preparation and processing services and molecular profiling of retrospective cohorts for its customers through its VERI/O laboratory, whereby the customer provides samples to be processed using HTG EdgeSeq technology specified in the order. Customers are charged a per sample fee for sample processing services which is recognized as revenue upon delivery of a data file to the customer showing the results of testing and completing delivery of the agreed upon service. This is when the customer can use and benefit from the results of testing and the Company has the present right to payment.

Contract Liabilities

The Company may receive up-front payments from customers for custom RUO assay design and sample processing services. In addition, payments for instrument extended warranty contracts are required to be made in advance. The Company recognizes such up-front payments as contract liabilities. The contract liabilities are subsequently reduced as revenue is recognized. Contract liabilities of approximately $0.1 million were included in other current liabilities and an additional immaterial amount of contract liabilities were included in other non-current liabilities in the accompanying condensed consolidated balance sheets as of June 30, 2022, reflecting the period in which the Company expects to realize the deferred revenue.

Changes in the Company’s contract liability were as follows as of the dates indicated:

	Product Revenue			Sample Processing			Total Contract Liability
Balance at January 1, 2022	$	128,529		$	30,621		$	159,150
Deferral of revenue		176,009			12,697			188,706
Recognition of deferred revenue		(161,948	)		(37,872	)		(199,820	)
Balance as of June 30, 2022	$	142,590		$	5,446		$	148,036

	Product Revenue			Sample Processing			Total Contract Liability
Balance at January 1, 2021	$	103,580		$	93,884		$	197,464
Deferral of revenue		153,400			350,224			503,624
Recognition of deferred revenue		(130,759	)		(351,626	)		(482,385	)
Balance as of June 30, 2021	$	126,221		$	92,482		$	218,703