Revenue

3 Months Ended

Apr. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue

2. Revenue

Product, Subscription and Support Revenue

The Company sells a collective defense software solution that is comprised of three product offerings, IronDefense, IronDome, and IronRadar. Through December 2022, the software platform was delivered through both on-premises licenses bundled with on-premises hardware and through subscription software. The Company stopped offering on-premises deployment options in December 2022.

The security appliance deliverables include proprietary operating system software and hardware together with regular threat intelligence updates and support, maintenance, and warranty. The Company combines intelligence dependent hardware and software licenses with the related threat intelligence and support and maintenance as a single performance obligation, as it delivers the essential functionality of the cybersecurity solution. The Company recognizes revenue for this single performance obligation ratably over the expected term. Judgment is required for the assessment of material rights relating to renewal options associated with the Company's contracts.

Revenue from subscriptions, which allow customers to use the Company's security software over a contracted period without taking possession of the software, and managed services, where the Company provides managed detection and response services for customers, is recognized over the contractual term. The cloud- based subscription revenue, where the Company also provides hosting, recognized for the three months ended April 30, 2023 and 2022 was $5,777 and $5,215, respectively. Overall product, subscription, and support revenue recognized for the three months ended April 30, 2023 and 2022, were $6,663 and $6,443, respectively.

Professional Services Revenue

The Company sells professional services, including cyber operations monitoring, security, training and tailored maturity assessments. Revenue derived from these services is recognized as the services are delivered. Revenue recognized from professional services for the three months ended April 30, 2023 and 2022, were $139 and $245, respectively.

Customer Concentration

For the three months ended April 30, 2023, 3 customers accounted for 37% or $2,374 of the Company's revenue, and for the three months ended April 30, 2022, two customers accounted for 22%, or $1,463, of the Company’s revenue. As of April 30, 2023 and January 31, 2023, two customers represented 72% and 56% of the total accounts receivable balance, respectively. Customer B elected not to renew the contract with the Company that ended in September 2023. The Company continues to pursue a subsequent contract with Customer B.

Significant customers are those which represent at least 10% of the Company’s total revenue for a period. The following table presents customers that represented 10% or more of the Company’s total revenue:

	For the Three Months Ended April 30,
	2023	2022
Customer A	12%	11%
Customer B	11%	11%
Customer C	14%	*
	37%	22%

* - less than 10%

Deferred Costs

The Company defers contract fulfillment costs that include appliance hardware. The balances in deferred costs are as follows:

Balance at February 1, 2023	$	4,362
Amounts recognized in cost of revenue		(640	)
Costs deferred		18
Balance at April 30, 2023	$	3,740
Balance at February 1, 2022	$	4,604
Amounts recognized in cost of revenue		(610	)
Costs deferred		100
Balance at April 30, 2022	$	4,094

Capitalized costs are included in deferred costs on the consolidated balance sheet, of which $2,110 is current and $1,630 is long-term as of April 30, 2023. The balance of deferred commissions at April 30, 2023 and January 31, 2023 were $1,420 and $1,751, respectively. Deferred commissions are included in the deferred costs on the condensed consolidated balance sheets, of which $908 is current and $511 is long-term as of April 30, 2023.

Deferred Revenue

Deferred revenue represents amounts received from and/or billed to customers in excess of revenue recognized. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue depending on whether the revenue recognition criteria have been met.

The balance in deferred revenue is as follows:

Balance at February 1, 2023	$	27,141
Revenue recognized		(6,802	)
Amounts deferred		6,516
Balance at April 30, 2023	$	26,855
Balance at February 1, 2022	$	33,566
Revenue recognized		(6,680	)
Amounts deferred		11,645
Balance at April 30, 2022	$	38,531

Of the revenue recognized in the three months ended April 30, 2023 and 2022, $5,806 and $5,934 was included in deferred revenue as of January 31, 2023 and 2022, respectively.

Remaining Performance Obligations

As of April 30, 2023, the remaining performance obligations totaled $34,682 The Company’s recognition of revenue in the future thereon will be in:

Years Ending January 31,
2024 (9 months)	$	16,960
2025		13,366
2026		3,817
2027		539
	$	34,682