Revenues

3 Months Ended

Mar. 31, 2020

Revenue Recognition

The Company earns revenues from sales of its products and related services, which are sold in the healthcare industry, its principal market. The Company’s customer arrangements typically include one or more of the following performance obligations:

Products. Software-enabled equipment that manages and regulates the storage and dispensing of pharmaceuticals, consumable blister cards and packaging equipment and other medical supplies.

Software. Additional software applications that enable incremental functionality of the Company’s equipment or services.

Installation. Installation of equipment as integrated systems at customer sites.

Post-installation technical support. Phone support, on-site service, parts, and access to unspecified software updates and enhancements, if and when available.

Professional services. Other customer services, such as training and consulting.

A portion of the Company’s sales are made to customers who are members of Group Purchasing Organizations (“GPOs”). GPOs are often owned fully or in part by the Company’s customers, and the Company pays fees to the GPO on completed contracts. The Company considers these fees consideration paid to customers and records them as reductions to revenue. Fees to GPOs were $2.9 million and $2.2 million for the three months ended March 31, 2020 and 2019, respectively.

Disaggregation of Revenues

The following table summarizes the Company’s product revenues disaggregated by revenue type for the three months ended March 31, 2020 and 2019:


	Three Months Ended March 31,
	2020		2019

	(In thousands)
Hardware and software	$	142,433	$	118,814
Consumables	23,270		23,707
Other	4,370		3,089
Total product revenues	$	170,073	$	145,610

The following table summarizes the Company’s revenues disaggregated by geographic region, which is determined based on customer location, for the three months ended March 31, 2020 and 2019:


	Three Months Ended March 31,
	2020		2019

	(In thousands)
United States	$	207,734	$	180,020
Rest of world ⁽¹⁾	21,952		22,497
Total revenues	$	229,686	$	202,517

_________________________________________________

⁽¹⁾No individual country represented more than 10% of total revenues.

Contract Assets and Contract Liabilities

The following table reflects the Company’s contract assets and contract liabilities:


	March 31, 2020		December 31, 2019

	(In thousands)
Short-term unbilled receivables, net ⁽¹⁾	$	10,048	$	11,707
Long-term unbilled receivables, net ⁽²⁾	14,338		12,260
Total contract assets	$	24,386	$	23,967

Short-term deferred revenues, net	$	108,602	$	90,894
Long-term deferred revenues	6,019		7,083
Total contract liabilities	$	114,621	$	97,977

_________________________________________________

⁽¹⁾Included in accounts receivable and unbilled receivables in the Condensed Consolidated Balance Sheets.

⁽²⁾Included in other long-term assets in the Condensed Consolidated Balance Sheets.

The portion of the transaction price allocated to the Company’s unsatisfied performance obligations for which invoicing has occurred is recorded as deferred revenues.

Short-term deferred revenues of $108.6 million and $90.9 million include deferred revenues from product sales and service contracts, net of deferred cost of sales of $15.4 million and $13.1 million, as of March 31, 2020 and December 31, 2019, respectively. The short-term deferred revenues from product sales relate to delivered and invoiced products, pending installation and acceptance, expected to occur within the next twelve months. During the three months ended March 31, 2020, the Company recognized revenues of $43.4 million that were included in the corresponding gross short-term deferred revenues balance of $104.0 million as of December 31, 2019.

Long-term deferred revenues include deferred revenues from service contracts of $6.0 million and $7.1 million as of March 31, 2020 and December 31, 2019, respectively. Remaining performance obligations primarily relate to maintenance contracts and are recognized ratably over the remaining term of the contract, generally not more than five years.

Significant Customers

There were no customers that accounted for more than 10% of the Company’s total revenues for the three months ended March 31, 2020 and 2019. Also, there were no customers that accounted for more than 10% of the Company’s accounts receivable balance as of March 31, 2020 and December 31, 2019.