Revenue

6 Months Ended

Jul. 01, 2023

Revenue from Contract with Customer [Abstract]

Revenue

3. Revenue

The following tables represent a disaggregation of revenue from contracts with customers for the three and six months ended July 1, 2023 and July 2, 2022.

Major Products and Service Lines

	Three Months Ended July 1, 2023								Three Months Ended July 2, 2022
	(In thousands)
	HDD		PV		ASP		Total		HDD		DCP		PV		Total
Systems, upgrades and spare parts	$	9,351	$	10	$	11	$	9,372	$	7,756	$	1	$	82	$	7,839
Field service		929		—		—		929		1,421		43		4		1,468
Total net revenues	$	10,280	$	10	$	11	$	10,301	$	9,177	$	44	$	86	$	9,307

	Six Months Ended July 1, 2023								Six Months Ended July 2, 2022
	(In thousands)
	HDD		PV		ASP		Total		HDD		DCP		PV		Total
Systems, upgrades and spare parts	$	19,868	$	28	$	11	$	19,907	$	10,879	$	1	$	135	$	11,015
Field service		1,936		—		—		1,936		2,684		43		10		2,737
Total net revenues	$	21,804	$	28	$	11	$	21,843	$	13,563	$	44	$	145	$	13,752

Primary Geographical Markets

	Three Months Ended				Six Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
	(In thousands)
United States	$	662	$	1,656	$	2,276	$	1,950
Asia		9,628		7,651		19,556		11,802
Europe		11		—		11		—
Total net revenues	$	10,301	$	9,307	$	21,843	$	13,752

Timing of Revenue Recognition

	Three Months Ended				Six Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
	(In thousands)
Products transferred at a point in time	$	10,301	$	9,307	$	21,843	$	13,752
Products and services transferred over time		—		—		—		—
Total net revenues	$	10,301	$	9,307	$	21,843	$	13,752

The following table reflects the changes in our contract assets, which we classify as accounts receivable, unbilled, and our contract liabilities, which we classify as deferred revenue and customer advances, for the six months ended July 1, 2023:

	July 1, 2023		December 31, 2022		Six Months Change
	(In thousands)
Contract assets:
Accounts receivable, unbilled	$	1,023	$	424	$	599
Contract liabilities:
Deferred revenue	$	310	$	2,446	$	(2,136	)
Customer advances		21,730		24,659		(2,929	)
	$	22,040	$	27,105	$	(5,065	)

Accounts receivable, unbilled represents a contract asset for revenue that has been recognized in advance of billing the customer. For our system and certain upgrade sales, our customers generally pay in three installments, with a portion of the system price billed upon receipt of an order, a portion of the price billed upon shipment, and the balance of the price due upon completion of installation and acceptance of the system at the customer’s factory. Accounts receivable, unbilled generally represents the balance of the system price that is due upon completion of installation and acceptance, less the amount that has been deferred as revenue for the performance of the installation tasks. During the six months ended July 1, 2023, contract assets increased by $599,000 primarily due to the accrual of revenue for a system delivered in the quarter ended July 1, 2023 that was pending acceptance as of July 1, 2023 and the accrual of revenue related to the sale of upgrades to a customer during the six months ended July 1, 2023, offset in part by the billing of accrued revenue related to spare parts sold to a customer as of December 31, 2022.

Customer advances generally represent a contract liability for amounts billed to the customer prior to transferring goods. The Company has elected to use the practical expedient to disregard the effect of the time value of money in a significant financing component when its payment terms are less than one year. These customer advances are liquidated when revenue is recognized. Deferred revenue generally represents a contract liability for amounts billed to a customer for completed systems at the customer site that are undergoing installation and acceptance testing where transfer of control has not yet occurred as Intevac does not yet have a demonstrated history of meeting the acceptance criteria upon the customer’s receipt of product. During the six months ended July 1, 2023, we recognized revenue of $3.0 million and $2.2 million that was included in customer advances and deferred revenue, respectively, at the beginning of the period.

In May 2023, the Company received notice of the cancellation of a $54.6 million order for eight 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and, accordingly, the Company removed the order from backlog. The customer contract associated with the cancelled order requires the customer to pay the Company a prorated price based upon the percentage of work completed on the order. The Company has received customer advances in the amount of $19.1 million associated with the cancelled order, all of which will be utilized to settle this customer obligation.

On July 1, 2023, we had $58.2 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 37.9% of our remaining performance obligations as revenue in 2023 and 62.1% in 2024.