Revenue Recognition

6 Months Ended

Aug. 03, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 4 – Revenue Recognition

We derive revenue from the sale of (i) hardware, including digital color label printers and specialty OEM printing systems, portable data acquisition systems, and airborne printers and networking hardware used in the flight deck and cabin of military, commercial and business aircraft, (ii) related supplies required in the operation of the hardware, (iii) repairs and maintenance of hardware and (iv) service agreements.

Revenues disaggregated by primary geographic markets and major product types are as follows:

Primary geographical markets

	Three Months Ended				Six Months Ended
(In thousands)	August 3, 2024		July 29, 2023*		August 3, 2024		July 29, 2023*
United States	$	23,777	$	20,124	$	43,341	$	40,820
Europe		10,222		9,933		19,192		19,796
Canada		2,741		2,289		4,500		4,169
Central and South America		1,336		1,024		2,534		2,224
Asia		2,080		1,779		3,265		3,250
Other		383		375		668		684
Total Revenue	$	40,539	$	35,524	$	73,500	$	70,943

*Certain amounts have been reclassified to conform to the current year's presentation.

Major product types

	Three Months Ended				Six Months Ended
(In thousands)	August 3, 2024		July 29, 2023		August 3, 2024		July 29, 2023
Hardware	$	12,359	$	11,268	$	21,234	$	22,934
Supplies		22,344		19,700		40,977		38,772
Service and Other		5,836		4,556		11,289		9,237
Total Revenue	$	40,539	$	35,524	$	73,500	$	70,943

In December 2022, we entered into an amended contract with one of our T&M customers that provided for a total payment of $3.25 million to us as a result of our claims allowable under French law relating to additional component costs we have incurred and will continue to incur in order to supply aerospace printers under the contract for the period beginning in April 2022 and continuing through fiscal 2025. Revenue from this arrangement will be recognized in proportion to the total estimated shipments through the end of the contract period. As of January 31, 2024, we recognized $2.4 million in revenue and the $0.8 million balance was recorded as deferred revenue. During the six months ended August 3, 2024, we recognized an additional $0.5 million which is included in revenue in the condensed consolidated statement of income (loss) for the respective period presented, and there is a balance of $0.3 million in deferred revenue at August 3, 2024. The remaining revenue to be recognized will be based on our shipments of the printers during the remainder of fiscal year 2025.

Contract Assets and Liabilities

We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time.

Our contract liabilities, which represent billings in excess of revenue recognized, are related to advanced billings for purchased service agreements and extended warranties. Contract liabilities were $457,000 and $530,000 at August 3, 2024 and January 31, 2024, respectively, and are recorded as deferred revenue in the accompanying condensed consolidated balance sheet. The decrease in the deferred revenue balance during the six months ended August 3, 2024 is due to revenue recognized during the current period, partially offset by cash payments received in advance of satisfying performance obligations, including $460,000 of revenue recognized that was included in the deferred revenue balance at January 31, 2024.

Contract Costs

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. These costs are deferred and amortized over the remaining useful life of these contracts, which we currently estimate to be approximately 17 years as of August 3, 2024. The balance of these contract assets at January 31, 2024 was $1.3 million. We also recognize an asset for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. In fiscal 2025, we incurred $0.3 million of costs to fulfill a contract which will be amortized over approximately 17 years. During the three and six months ended August 3, 2024, we amortized contract costs of $23,000 and $42,000, respectively. The balance of deferred incremental direct costs net of accumulated amortization at August 3, 2024 was $1.6 million, of which $0.1 million is reported in other current assets, and $1.5 million is reported in other assets in the accompanying condensed consolidated balance sheet.