Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

v3.23.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
3.   Revenue Recognition
Revenue by Service Line
Three Months Ended June 30,
(in thousands) 2023 2022
Functional neurosurgery navigation and therapy
Disposable products $ 1,818  $ 1,798 
Services 383  375 
Subtotal – Functional neurosurgery navigation and therapy
 2,201  2,173 
Biologics and drug delivery
Disposable products 346  1,225 
Services and license fees 3,022  1,183 
Subtotal – Biologics and drug delivery revenue 3,368  2,408 
Capital equipment and software
Systems and software products 173  434 
Services 208  185 
Subtotal – Capital equipment and software revenue 381  619 
Total revenue $ 5,950  $ 5,200 
Six Months Ended June 30,
(in thousands) 2023 2022
Functional neurosurgery navigation and therapy
Disposable products $ 3,676  $ 3,661 
Services 886  750 
Subtotal – Functional neurosurgery navigation and therapy
 4,562  4,411 
Biologics and drug delivery
Disposable products 940  2,075 
Services and license fees 5,104  2,487 
Subtotal – Biologics and drug delivery revenue 6,044  4,562 
Capital equipment and software
Systems and software products 351  884 
Services 426  374 
Subtotal – Capital equipment and software revenue 777  1,258 
Total revenue $ 11,383  $ 10,231 
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 December 31, 2022, the Company 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 six months ended June 30, 2023, the Company recognized approximately $0.5 million and $0.8 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 $0.9 million at June 30, 2023. The Company expects to recognize approximately 73% of this revenue over the next twelve months and the remainder thereafter.