Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

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Revenue Recognition
 9 Months Ended
Sep. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
3.   Revenue Recognition
Revenue by Service Line
Three Months Ended September 30,
(in thousands) 2023 2022
Biologics and drug delivery
Disposable products $ 455  $ 798 
Services and license fees 3,032  1,448 
Subtotal – Biologics and drug delivery revenue 3,487  2,246 
Functional neurosurgery navigation and therapy
Disposable products 1,874  2,045 
Services 44  375 
Subtotal – Functional neurosurgery navigation and therapy
 1,918  2,420 
Capital equipment and software
Systems and software products 81  287 
Services 276  193 
Subtotal – Capital equipment and software revenue 357  480 
Total revenue $ 5,762  $ 5,146 
Nine Months Ended September 30,
(in thousands) 2023 2022
Biologics and drug delivery
Disposable products $ 1,395  $ 2,873 
Services and license fees 8,136  3,935 
Subtotal – Biologics and drug delivery revenue 9,531  6,808 
Functional neurosurgery navigation and therapy
Disposable products 5,550  5,706 
Services 930  1,125 
Subtotal – Functional neurosurgery navigation and therapy
 6,480  6,831 
Capital equipment and software
Systems and software products 432  1,171 
Services 702  567 
Subtotal – Capital equipment and software revenue 1,134  1,738 
Total revenue $ 17,145  $ 15,377 
Contract Balances
•Contract assets – The timing of revenue recognition may differ from the time of billing to the Company's customers. In most cases, customers are billed upon shipment of such products or delivery of such services and the related contract assets, which represent an unconditional right to consideration, comprise the accounts receivable balances that are included in the accompanying condensed consolidated balance sheets. When revenue is recognized in advance of its right to bill and receive consideration, the Company records a contract asset. At September 30, 2023, the Company had $0.6 million in contract assets classified as other current assets in the accompanying condensed consolidated balance sheets. Additionally, at December 31, 2022, the Company also had $0.3 million in deferred contract costs, classified as other current assets, related to up-front costs for direct materials incurred to fulfill a customer contract. These costs were recognized as cost of revenue in the second quarter of 2023.
•Contract liabilities – Contract liabilities consist of amounts that have been invoiced and for which the Company has the right to bill, but that have not been recognized as revenue as the related goods or services have not been transferred. The Company's contract liabilities are generally comprised of the following (1) capital equipment and software-related service fees that are typically billed and collected at the inception of the service agreements, which have terms ranging from one to three years, (2) annual fees for agreements with customers that bundle the capital equipment and software-related service fees with software and hardware upgrades that are made commercially available over the term of the contract, and (3) up-front payments from customers made in connection with consulting services. The unearned portion of all such fees is classified as deferred revenue. Additionally, at December 31, 2022, the Company had a $0.5 million refund liability resulting from an up-front customer payment which was potentially refundable if the parties did not enter into the ensuing agreement. In 2023, the uncertainties underlying this amount were resolved and the amount was recognized as revenue.
During the three and nine months ended September 30, 2023, the Company recognized approximately $0.2 million and $1.0 million of revenue, respectively, which was previously included in deferred revenue in the accompanying condensed consolidated balance sheet at December 31, 2022.
Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue that will be recognized as revenue in future periods. The majority of the remaining performance obligations relate to capital equipment and software-related service agreements and the upfront payments discussed under the heading "Contract Balances" above, which amounted to approximately $1.7 million at
September 30, 2023. The Company expects to recognize 69% of this revenue over the next twelve months and the remainder thereafter.