Revenue Recognition

12 Months Ended

Jan. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 3—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 used in the flight deck and interior of commercial, business and military aircraft, (ii) related consumable supplies including paper, labels, tags, inks, toners and ribbons, (iii) repairs and maintenance of equipment and (iv) service agreements.

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

Primary geographical markets:

(In thousands)	2023		2022		2021
United States	$	91,917	$	68,185	$	70,911
Europe		31,021		31,922		29,029
Canada		8,393		6,519		5,574
Asia		5,345		5,926		5,105
Central and South America		4,589		3,271		3,950
Other		1,262		1,657		1,464
Total Revenue	$	142,527	$	117,480	$	116,033

Major product types:

(In thousands)	2023		2022		2021
Hardware	$	42,445	$	31,492	$	34,111
Supplies		82,072		73,244		71,772
Service and Other		18,010		12,744		10,150
Total Revenue	$	142,527	$	117,480	$	116,033

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 be received 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 2025. As of January 31, 2023, $1.1 million was recognized as revenue in the consolidated income statement for the period ended January 31, 2023, in proportion to the total estimated shipments through the end of the contract period. The balance is recorded within deferred revenue, both current and non-current, and will be recognized into revenue based on shipments made of the printers during fiscal years 2024 and 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 $412,000 and $262,000 at January 31, 2023 and January 31, 2022, respectively, and are recorded as current deferred revenue in the accompanying consolidated balance sheet. The decrease in the deferred revenue balance during the year ended January 31, 2023 is primarily due to $248,000 of revenue recognized during the period that was included in the deferred revenue balance at January 31, 2023 offset by cash payments received in advance of satisfying performance obligations.

Contract Costs

We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. In the second quarter of fiscal 2022, we extended the remaining useful life of these deferred costs from 6 years to 20 years and changed the amortization method from units sold to the straight-line method. We believe these changes, based on the life of the aircraft under the applicable sales contracts, appropriately reflects a more systematic and rational approach. This change was treated as a change in accounting estimate that is affected by a change in accounting principle. The impact on net income was immaterial for the period ended January 31, 2022. The balance of these contract assets at January 31, 2022, was $1.3 million, and in the first quarter of fiscal 2023 we incurred an additional $0.1 million in contract costs that will be amortized over 19 years. For the years ended January 31, 2023, 2022 and 2021, we amortized contract costs of $75,000, $60,000 and $27,000, respectively. The balance of deferred incremental direct costs net of accumulated amortization at January 31, 2023, was $1.4 million, of which $0.1 million is reported in other current assets and $1.3 million is reported in other assets in the accompanying consolidated balance sheet.