Revenue from Contracts with Customers

3 Months Ended

Apr. 02, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

The Company derives revenue from contracts with customers primarily from the following and categorizes its revenue as follows:

•Systems include revenue from the sale of access and premises systems, software platform licenses and cloud-based software subscriptions; and

•Services include revenue from customer support, software- and cloud-based maintenance, extended warranty subscriptions, professional services, training and managed services.

The following is a summary of revenue disaggregated by geographic region based upon the location of the customers (in thousands):

	Three Months Ended
	April 2, 2022		April 3, 2021
United States	$	165,631	$	139,347
Americas ex U.S.		8,871		11,403
Europe		6,573		3,414
Middle East & Africa		3,617		7,089
Asia Pacific		256		821
	$	184,948	$	162,074

Contract Asset

The primary contract asset is revenue recognized on professional services contracts where the services are transferred to the customer over time, which has yet to be billed, and is classified within accounts receivable. Amounts are billed in accordance with the agreed-upon contractual terms. The balance as of December 31, 2021 was $1.7 million of which $0.9 million remained in the Company’s Condensed Consolidated Balance Sheet as of April 2, 2022. The closing balance as of April 2, 2022 was $2.1 million of which the Company expects to bill 83% of the balance during the remainder of 2022. The increase in the contract asset was driven by the timing of professional services contracts with the Company's customers.

Contract Liability

Deferred revenue consisted of the following (in thousands):

	April 2, 2022		December 31, 2021
Current:
Products and services	$	27,293	$	22,586
Extended warranty	4,968		4,892
	32,261		27,478
Long-term:
Products and services	2,568		3,137
Extended warranty	18,621		18,879
	21,189		22,016
	$	53,450	$	49,494

The increase in the deferred revenue balance for the three months ended April 2, 2022 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations offset by $7.3 million of revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Revenue allocated to remaining performance obligations represents contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. This amount was $138.0 million as of April 2, 2022, and the Company expects to recognize 35% of such revenue over the next 12 months and the remainder thereafter.

Contract Costs

The Company capitalizes certain sales commissions related primarily to multi-year subscriptions and extended warranty support for which the expected amortization period is greater than one year. As of April 2, 2022 and December 31, 2021, the unamortized balance of deferred commissions was $7.3 million and $7.4 million, respectively. For the three months ended April 2, 2022 and April 3, 2021, the amount of amortization was $0.8 million and $0.1 million, respectively. There was no impairment loss in relation to the costs capitalized for either period.

Concentration of Customer Risk

No customer accounted for more than 10% of the Company’s total revenue for the three months ended April 2, 2022 and April 3, 2021.

No customer represented more than 10% of the Company’s accounts receivable as of April 2, 2022. One customer represented 12% of the Company’s accounts receivable as of December 31, 2021.