Revenue

9 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

Note 3. Revenue

Contract Balances

The timing of revenue recognition, billings, and cash collections results in trade receivables, unbilled receivables, and deferred revenues on the unaudited condensed consolidated balance sheets. The Company may offer longer or extended payment terms of more than one year for qualified customers in some circumstances. At times, revenue recognition occurs before the billing, resulting in an unbilled receivable, which represents a contract asset. The contract asset is a component of accounts receivable and other assets for the current and non-current portions, respectively.

When the Company receives advances or deposits from customers before revenue is recognized, this results in a contract liability. It can take two or more years from the time of order to revenue recognition due to the Company’s long sales cycle.

Changes in the contract assets and liabilities are as follows (dollars in thousands):

	March 31, 2023		June 30, 2022		Change
	Amount		Amount		$			%
Contract Assets:
Unbilled accounts receivable – current (1)	$	10,238	$	13,325		(3,087	)		(23	%)
Interest receivable – current (2)		388		493		(105	)		(21	%)
Long-term accounts receivable (3)		4,782		5,301		(519	)		(10	%)
Interest receivable – non-current (3)		637		683		(46	)		(7	%)
Contract Liabilities:
Customer advances		22,078		25,290		(3,212	)		(13	%)
Deferred revenue – current		73,137		75,375		(2,238	)		(3	%)
Deferred revenue – non-current		29,245		24,694		4,551			18	%

(1)Included in accounts receivable on the unaudited condensed consolidated balance sheets.

(2)Included in prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets.

(3)Included in other assets on the unaudited condensed consolidated balance sheets.

During the nine months ended March 31, 2023, contract assets changed primarily due to changes in the timing of billings that occurred after revenues were recognized and changes in transactions with payment terms exceeding 12 months. During the nine months ended March 31, 2023, contract liabilities changed due to changes in the timing of revenue recognition as a result of changes in shipping timing, transaction price, reduced customer deposits for system sales and for which the warranty was deferred.

During the three and nine months ended March 31, 2023, the Company recognized revenue of $17.9 million and $73.4 million, respectively, which was included in the deferred revenue balances at June 30, 2022. During the three and nine months ended March 31, 2022, the Company recognized revenue of $12.5 million and $71.2 million, which was included in the deferred revenue balances at June 30, 2021.

Remaining Performance Obligations

Remaining performance obligations represent deferred revenue from open contracts for which performance has already started and the transaction price from executed contracts for which performance has not yet started. Service contracts in general are considered month-to-month contracts.

As of March 31, 2023, total remaining performance obligations amounted to $1,060.2 million. Of this total amount, $72.4 million related to long-term warranty and non-cancellable post-warranty services, which is the estimated revenue expected to be recognized over the remaining service period and warranty period for systems that have been delivered (the time bands reflect management’s best estimate of when the Company will transfer control to the customer and may change based on timing of shipment, readiness of customers’ facilities for installation, installation requirements, and availability of products). The Company has elected the practical expedient to not disclose the unsatisfied performance obligations of contracts with an original expected duration of one year or less.

The following table represents the Company's remaining performance obligations related to long-term warranty and non-cancellable post-warranty services as of March 31, 2023 (in thousands):

	Fiscal years of revenue recognition
	2023		2024		2025		Thereafter
Long-term warranty and non-cancellable post-warranty services	$	8,396	$	27,188	$	19,657	$	17,131

For the remaining $987.8 million of performance obligations (i.e., open systems sales, upgrades, training and other miscellaneous items), the Company estimates 26% to 28% will be recognized in the next 12 months, and the remaining portion will be recognized thereafter. The Company’s historical experience indicates that some of its customers will cancel or renegotiate contracts as economic conditions change or when product offerings change during the long sales cycle. The Company anticipates a portion of its open contracts may never result in revenue recognition primarily due to the long sales cycle and factors outside of its control, including changes to its customers' needs or financial condition, changes in government or health insurance reimbursement policies, or changes to regulatory requirements. Based on historical experience and management's best estimate, approximately 19% of the Company’s $937.5 million open system sales contracts as of March 31, 2023, may never result in revenue.

Capitalized Contract Costs

As of March 31, 2023, and June 30, 2022, the balance of capitalized costs to obtain a contract was $11.5 million and $11.4 million, respectively. The Company has classified the capitalized costs to obtain a contract as a component of prepaid expenses and other current assets and other assets with respect to the current and non-current portions of capitalized costs, respectively, on the unaudited condensed consolidated balance sheets.

The Company incurred impairment losses of $0.2 million and $0.6 million during the three and nine months ended March 31, 2023, respectively, and $0.1 million and $0.4 million during the three and nine months ended March 31, 2022, respectively. The Company recognized expenses related to the amortization of the capitalized contract costs of $1.0 million and $2.9 million during the three and nine months ended March 31, 2023, respectively, and $1.0 million and $2.8 million during the three and nine months ended March 31, 2022, respectively.