Revenue

3 Months Ended

Mar. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue

3. Revenue

The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 30, 2024 and April 1, 2023.

Major Products and Service Lines

	Three Months Ended March 30, 2024		Three Months Ended April 1, 2023
	(In thousands)
	HDD		HDD		PV		Total
Systems, upgrades and spare parts	$	8,119	$	10,517	$	18	$	10,535
Field service		1,512		1,007		—		1,007
Total net revenues	$	9,631	$	11,524	$	18	$	11,542

Revenue by Geographic Region

	Three Months Ended
	March 30, 2024		April 1, 2023
	(In thousands)
United States	$	482	$	1,614
Asia		9,149		9,928
Total net revenues	$	9,631	$	11,542

Timing of Revenue Recognition

	Three Months Ended
	March 30, 2024		April 1, 2023
	(In thousands)
Products transferred at a point in time	$	9,631	$	11,542
Products and services transferred over time		—		—
Total net revenues	$	9,631	$	11,542

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 three months ended March 30 2024.

	March 30, 2024		December 30, 2023		Three Months Change
	(In thousands)
Contract assets:
Accounts receivable, unbilled	$	884	$	393	$	491
Contract liabilities:
Deferred revenue	$	476	$	376	$	100
Customer advances		24,526		21,889		2,637
	$	25,002	$	22,265	$	2,737

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 three months ended March 30, 2024, contract assets increased by $491,000 primarily due to the accrual of revenue related to the sale of spare parts sold to a customer as of March 30, 2024.

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 three months ended March 30, 2024, we recognized revenue of $66,000 that was included in deferred revenue 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. In September 2023, the Company applied $444,000 of billings against these advances in connection with inventory scrapped at the customer’s direction. In December 2023, the Company received notice of the cancellation of a $11.4 million order for two 200 Lean HDD systems due to the customer postponing previously planned media capacity additions, and, accordingly, the Company removed the order from backlog. The Company has not received any customer advances associated with the cancelled order. The Company expects to invoice the customer in the second quarter of fiscal 2024 for the cancellation fee associated with this order.

On March 30, 2024, we had $53.1 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 55.4% of our remaining performance obligations as revenue in 2024 and 44.6% in 2025.