Revenue Recognition

6 Months Ended

Jun. 30, 2022

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 the Company’s total revenue for the three and six months ended June 30, 2022 and 2021.

Remaining Performance Obligation

As of June 30, 2022, the aggregate amount of the total transaction price allocated in contracts with original duration of one year or greater to the remaining performance obligations was $408.8 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 its performance. The increase in the deferred revenue balance as of June 30, 2022 is primarily driven by cash payments received or due in advance of its performance obligations, partially offset by $95.8 million of revenues recognized that were included in the deferred revenue balance as of December 31, 2021.

The following table presents deferred revenue by revenue source:

	Deferred Revenue
	June 30, 2022		December 31, 2021
	(In thousands)
Hosted services – Business	$	108,284	$	94,107
Hosted services – Consumer	818		870
Professional services – Business	1,492		3,831
Total deferred revenue - short term	$	110,594	$	98,808
Professional services – Business	$	—	$	54
Total deferred revenue - long term	$	—	$	54

    

Disaggregated Revenue

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	(In thousands)
Revenue:
Hosted services – Business	$	94,856	$	95,092	$	201,180	$	178,732
Hosted services – Consumer	9,129		9,810		18,251		18,821
Professional services – Business	28,580		14,703		43,331		29,943
Total revenue	$	132,565	$	119,605	$	262,762	$	227,496

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				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	(In thousands)
United States	$	90,433	$	80,924	$	177,570	$	149,706
Other Americas (1)	2,975		3,995		8,014		7,908
Total Americas	93,408		84,919		185,584		157,614
EMEA (2) (4)	17,963		22,933		41,783		44,693
APAC (3)	21,194		11,753		35,395		25,189
Total revenue	$	132,565	$	119,605	$	262,762	$	227,496

—————————————

(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 $13.8 million and $14.8 million for the three months ended June 30, 2022 and 2021, respectively, and from the Netherlands of $2.2 million and $1.2 million for the three months ended June 30, 2022 and 2021, respectively. Includes revenues from the United Kingdom of $28.5 million and $28.1 million for the six months ended June 30, 2022 and 2021, respectively, and from the Netherlands of $3.5 million and $2.5 million for the six months ended June 30, 2022 and 2021, 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 the Company’s 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, 2021	$	69,259	$	24,545	$	40,675	$	98,808	$	54
(Decrease) increase, net	24,262		3,662		2,712		11,786		(54)
Ending balance as of June 30, 2022	$	93,521	$	28,207	$	43,387	$	110,594	$	—

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 the Company determines amounts are no longer collectible.

	Allowance for Doubtful Accounts
	(In thousands)
Balance as of December 31, 2021	$	6,338
Additions charged to costs and expenses	3,477
Deductions/ write-offs	(1,611)
Balance as of June 30, 2022	$	8,204