Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

v3.23.1
Revenue Recognition
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
3.   Revenue Recognition
Revenue by Service Line
Three Months Ended March 31,
(in thousands) 2023 2022
Functional neurosurgery navigation and therapy
Disposable products $ 1,858  $ 1,863 
Services 503  375 
Subtotal – Functional neurosurgery navigation and therapy
 2,361  2,238 
Biologics and drug delivery
Disposable products 594  850 
Services and license fees 2,082  1,304 
Subtotal – Biologics and drug delivery revenue 2,676  2,154 
Capital equipment and software
Systems and software products 178  450 
Services 218  189 
Subtotal – Capital equipment and software revenue 396  639 
Total revenue $ 5,433  $ 5,031 
Contract Balances
•Contract assets – Substantially all the Company’s contracts with customers are based on customer-issued purchase orders for distinct products or services. Customers are billed generally upon shipment of such products or delivery of such services, and the related contract assets comprise the accounts receivable balances included in the accompanying condensed consolidated balance sheets. At March 31, 2023, the Company also had $0.4 million in deferred contract costs related to up-front costs for direct materials incurred to fulfill a customer contract. These costs are classified as other current assets, and are expected to be recognized as cost of revenue in 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 which 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. As of
March 31, 2023, the uncertainties underlying this amount have been resolved and the amount has been recognized as revenue.
During the three months ended March 31, 2023, the Company recognized approximately $0.3 million of revenue, 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 $1.5 million at March 31, 2023. The Company expects to recognize approximately 79% of this revenue over the next twelve months and the remainder thereafter.