Revenue from Contracts with Customers

On January 1, 2018, the Company adopted the new standard for revenue recognition provided in “ASU 2014-09, Revenue from Contracts with Customers” and has applied the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a transition adjustment which reduced opening retained earnings by $0.8 million as of January 1, 2018 due to the cumulative impact of adopting the new revenue standard. The Company's revenues for the twelve months ended December 31, 2018 included the recognition of $0.8 million, as a result of adopting the new revenue standard and satisfying certain performance obligations during the period.

The Company has determined that its collaborative agreements fall within the scope of ASC 808, Collaborative Arrangements, and applies the principles of ASC 606, Revenue from Contracts with Customers, in the measurement and recognition of revenue. In addition, the Company has concluded that when service contracts are sold as part of a bundled arrangement with other products and services, these contracts will no longer be accounted for under separate accounting guidance, but rather included as a separate performance obligation within a contract subject to the new standard, which includes their inclusion in the determination and allocation of the aggregate transaction price, and recognition of revenue upon the delivery of the performance obligation.

Performance obligations

Performance obligations related to instrument sales are reviewed on a contract-by-contract basis, as individual contract terms may vary, and may include installation and calibration services. For instruments sold solely to run Prosigna assays, training to the customer is a required performance obligation prior to any revenue recognition related to the instrument sale. Performance obligations for the Company's consumable products are generally completed upon shipment to the customer.

Disaggregated Revenues

The following table provides information about disaggregated revenue by major product line and primary geographic market (in thousands):



	Year Ended December 31, 2018
	Americas		Europe and Middle East		Asia Pacific		Total
Product revenue:
Instruments	$	12,033	$	6,677	$	2,731	$	21,441
Consumables	29,653		10,847		3,347		43,847
In vitro diagnostic kits	3,014		6,094		337		9,445
Total product revenue	44,700		23,618		6,415		74,733
Service revenue	6,228		2,097		465		8,790
Total product and service revenue	50,928		25,715		6,880		83,523
Collaboration revenue	23,209		—		—		23,209
Total revenues	$	74,137	$	25,715	$	6,880	$	106,732



	Year Ended December 31, 2017⁽¹⁾
	Americas		Europe and Middle East		Asia Pacific		Total
Product revenue:
Instruments	$	10,556	$	6,561	$	3,722	$	20,839
Consumables	25,583		9,934		2,794		38,311
In vitro diagnostic kits	2,473		3,982		290		6,745
Total product revenue	38,612		20,477		6,806		65,895
Service revenue	4,592		1,314		209		6,115
Total product and service revenue	43,204		21,791		7,015		72,010
Collaboration revenue	42,895		—		—		42,895
Total revenues	$	86,099	$	21,791	$	7,015	$	114,905



	Year Ended December 31, 2016⁽¹⁾
	Americas		Europe and Middle East		Asia Pacific		Total
Product revenue:
Instruments	$	12,086	$	7,900	$	4,243	$	24,229
Consumables	27,015		7,481		3,049		37,545
In vitro diagnostic kits	1,517		2,476		175		4,168
Total product revenue	40,618		17,857		7,467		65,942
Service revenue	2,357		640		195		3,192
Total product and service revenue	42,975		18,497		7,662		69,134
Collaboration revenue	17,355		—		—		17,355
Total revenues	$	60,330	$	18,497	$	7,662	$	86,489

⁽¹⁾ Amounts have not been retrospectively modified to reflect the adoption of Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers, for the years ended December 31, 2017 and 2016, respectively.

Contract balances and remaining performance obligations

Contract liabilities are included in the current and long-term portions of deferred revenue of $11.5 million and $12.5 million as of December 31, 2018 and December 31, 2017, respectively, and within customer deposits of $8.2 million and $8.9 million as of December 31, 2018 and December 31, 2017, respectively, on the consolidated balance sheets. Total contract liabilities decreased by $1.8 million for the twelve months ended December 31, 2018 as a result of cash payments received of $29.0 million related to our collaborations and service contracts, partially offset by the recognition of previously deferred revenue of $30.8 million for the completion of certain performance obligations during the period. The Company did not record any contract assets as of December 31, 2018.

Unsatisfied or partially unsatisfied performance obligations related to collaboration agreements as of December 31, 2018 were $13.4 million and are expected to be completed over the period of each collaboration agreement, through June 2020. Performance obligations related to product and service contracts as of December 31, 2018 were $6.3 million and are expected to be completed over the term of the related contract, through August 2023.

Practical expedients

The Company generally recognizes expense related to the acquisition of contracts, such as sales commissions, at the time of revenue recognition, which is generally in the same period products are sold, and in the case of services, revenue is recognized as services are rendered or over the period of time covered by the service contract, which is typically 12-months from the sale. The Company has not established any contract assets or liabilities related to contract acquisition costs as of December 31, 2018. The Company records commission expenses within selling, general and administrative expenses.

Impact of new revenue standard

In accordance with the new revenue guidance, which the Company adopted effective January 1, 2018, the disclosure of the impact of adoption of this new standard to our consolidated statements of operations was as follows:



	Year Ended December 31, 2018
(in thousands, except per share amounts)	As Reported			Amounts under previous revenue standard			Effect of Change
Revenue:
Product and service	$	83,523		$	82,769		$	754
Collaboration	23,209			23,209			—
Total revenue	106,732			105,978			754
Net loss	$	(77,400	)	$	(78,154	)	$	754
Net loss per share - basic and diluted	$	(2.78	)	$	(2.80	)	$	0.02

The adoption of the new revenue standard did not have an aggregate impact on the Company’s net cash provided by operating activities, but resulted in offsetting changes in certain liabilities presented within net cash provided by operating activities in the Company’s consolidated statement of cash flows, as reflected in the above tables.