Revenue Recognition

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue Recognition

The majority of the Company's revenue is generated from monthly service revenues, which is inclusive of its platform usage pricing model, and related professional services from the sale of its services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services. No single customer accounted for 10% or more of its total revenue for the nine months ended September 30, 2021.

Remaining Performance Obligation

As of September 30, 2021, the aggregate amount of the total transaction price allocated in contracts with original duration of greater than one year to the remaining performance obligations was $370.3 million. Approximately 92% of the Company's remaining performance obligations is expected to be recognized during the next 24 months, with the balance recognized thereafter. The aggregate balance of unsatisfied performance obligations represents contracted revenue that has not yet been recognized, and does not include contract amounts that are cancellable by the customer, amounts associated with optional renewal periods, and any amounts related to performance obligations, which are billed and recognized as they are delivered.

Deferred Revenues

The Company records deferred revenues when cash payments are received or due in advance of our performance. The increase in the deferred revenue balance as of September 30, 2021 is primarily driven by cash payments received or due in advance of its performance obligations, partially offset by $70.5 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2020.

The following table presents deferred revenue by revenue source:

	Deferred Revenue
	September 30, 2021		December 31, 2020
	(In thousands)
Hosted services – Business	$	100,694	$	86,144
Hosted services – Consumer	883		835
Professional services – Business	1,328		1,869
Total deferred revenue - short term	$	102,905	$	88,848
Professional services – Business	179		409
Total deferred revenue - long term	$	179	$	409

    

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(In thousands)
Revenue:
Hosted services – Business	$	93,234	$	74,396	$	271,966	$	207,832
Hosted services – Consumer	9,123		7,881		27,944		21,707
Professional services – Business	15,970		12,527		45,913		34,956
Total revenue	$	118,327	$	94,804	$	345,823	$	264,495

Revenue by Geographic Location

The following table presents the Company’s revenues attributable to domestic and foreign operations for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(In thousands)
United States	$	80,096	$	58,561	$	229,802	$	166,668
Other Americas (1)	4,009		3,979		11,917		9,047
Total Americas	84,105		62,540		241,719		175,715
EMEA (2) (4)	23,399		22,290		68,092		61,473
APAC (3)	10,823		9,974		36,012		27,307
Total revenue	$	118,327	$	94,804	$	345,823	$	264,495

—————————————

(1)Canada, Latin America and South America

(2)Europe, the Middle East and Africa (“EMEA”)

(3)Asia-Pacific (“APAC”)

(4)Includes revenues from the United Kingdom of $14.3 million and $14.6 million for the three months ended September 30, 2021 and 2020, respectively, and from the Netherlands of $1.2 million and $0.6 million for the three months ended September 30, 2021 and 2020, respectively. Includes revenues from the United Kingdom of $42.4 million and $39.7 million for the nine months ended September 30, 2021 and 2020, respectively, and from the Netherlands of $3.7 million and $2.5 million for the nine months ended September 30, 2021 and 2020, respectively.

Information about Contract Balances

Amounts collected in advance of services being provided are accounted for as deferred revenue. Nearly all of the Company's deferred revenue balance is related to Hosted services - Business revenue.

In some arrangements, the Company allows customers to pay for access to the Conversational Cloud over the term of the software license. The Company refers to these as subscription transactions. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables, anticipated to be invoiced in the next twelve months, are included in accounts receivable on the condensed consolidated balance sheet. Contract acquisition costs represent prepaid sales commissions. The opening and closing balances of its accounts receivable, unbilled receivables, contract acquisition costs, and deferred revenues are as follows:

	Accounts Receivable		Unbilled Receivable		Contract Acquisition Costs (Non-current)		Deferred Revenue (Current)		Deferred Revenue (Non-current)
	(In thousands)
Opening balance as of December 31, 2020	$	61,801	$	18,622	$	41,021	$	88,848	$	409
(Decrease) increase, net	(12,164)		14,901		2,684		14,057		(230)
Ending balance as of September 30, 2021	$	49,637	$	33,523	$	43,705	$	102,905	$	179

Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible.

	Allowance for Doubtful Accounts
	(In thousands)
Balance as of December 31, 2020	$	5,344
Additions charged to costs and expenses	2,431
Deductions/write-offs	(2,174)
Balance as of September 30, 2021	$	5,601