REVENUE RECOGNITION

6 Months Ended

Jan. 31, 2024

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents the Company's revenues from contracts with customers disaggregated by major good or service line and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments.

	Successor		Predecessor		Successor		Predecessor
	Three Months Ended January 31,		Three Months Ended January 31,		Six Months Ended January 31,		Six Months Ended January 31,
	2024		2023		2024		2023
	(in thousands)
Major Goods/Service Lines
Supply chain management services	$	42,697	$	50,427	$	83,702	$	101,358
Other	348		354		684		782
	$	43,045	$	50,781	$	84,386	$	102,140
Timing of Revenue Recognition
Services transferred over time	$	43,045	$	50,781	$	84,386	$	102,140
	$	43,045	$	50,781	$	84,386	$	102,140

Supply Chain Management Services

ModusLink's revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to customers under these arrangements include revenue attributable to the services performed as well as for materials procured on the customer's behalf as part of its service to them. The majority of these arrangements consist of two distinct performance obligations (i.e., warehousing/inventory management service and a separate kitting/packaging/assembly service), revenue related to each of which is recognized over time as services are performed using an input method based on the level of efforts expended.

Other

Other revenue consists of cloud-based software subscriptions, software maintenance and support service contracts, and fees for professional services. Revenue related to these arrangements is recognized on a straight-line basis over the term of the agreement or over the term of the agreement in proportion to the costs incurred in satisfying the obligations under the contract.

Contract Balances

Timing of revenue recognition may differ from timing of invoicing to customers. The Company records contract assets and liabilities related to its contracts with customers as follows:

•Accounts receivable when revenue is recognized prior to receipt of cash payments and if the right to such amounts is unconditional and solely based on the passage of time.

•Contract asset when the Company recognizes revenue based on efforts expended but the right to such amount is conditional upon satisfaction of another performance obligation. Contract assets are primarily comprised of fees related to supply chain management services. The Company's contract assets are all short-term in nature and are included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

•Deferred revenue when cash payments are received or due in advance of performance. Deferred revenue is primarily comprised of fees related to supply chain management services, cloud-based software subscriptions and software maintenance and support service contracts, which are generally billed in advance. Deferred revenue also includes other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. The deferred revenue balance is classified as a component of other current liabilities and other long-term liabilities on the Company's condensed consolidated balance sheets.

The table below presents information for the Company's contract balances:

	Successor				Predecessor
	January 31, 2024		July 31, 2023		August 1, 2022
	(in thousands)
Accounts receivable, trade, net	$	29,179	$	28,616	$	40,083
Contract assets	369		439		369
Deferred revenue - current	$	2,947	$	2,574	$	2,705
Deferred revenue - long-term	303		144		134
Total deferred revenue	$	3,250	$	2,718	$	2,839

Remaining Performance Obligations

Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the six months ended January 31, 2024 and January 31, 2023, were as follows:

	Successor		Predecessor
	Six Months Ended January 31,		Six Months Ended January 31,
	2024		2023
	(in thousands)
Balance at beginning of period	$	2,718	$	2,839
Deferral of revenue	1,271		1,483
Recognition of deferred amounts upon satisfaction of performance obligation	(739)		(745)
Balance at end of period	$	3,250	$	3,577

The Company expects to recognize approximately $2.9 million of the deferred revenue over the next twelve months and the remaining $0.3 million beyond that time period.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.