Note 2 - Revenue Recognition

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE 2: REVENUE RECOGNITION

In May 2014, the FASB issued new guidance related to revenue recognition, which outlines a comprehensive revenue recognition model and supersedes most prior revenue recognition guidance. The Company adopted ASC 606 on January 1, 2018 for all open contracts on the date of initial application, and applied the standard using modified retrospective approach, with the cumulative effect of applying ASC 606 recognized as an adjustment to the opening retained earnings balance. The Company recorded a net increase to opening retained earnings of $8,555 as of January 1, 2018 due to the cumulative impact of adopting ASC 606. The impact to revenues for the year ended December 31, 2018 was an increase of $4,078, as a result of adopting ASC 606.

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The estimated revenues do not include amounts of royalties or unexercised contract renewals:

	2021		2022
License and related revenues	$	11,603	$	404

Under ASC 606, the Company is required to capitalize incremental costs that are related to sales during the period, consisting primarily of sales commissions earned when contracts are signed. For contracts that have a duration of less than one year, the Company follows ASC 606’s practical expediency, and expenses these costs when incurred; for contracts with life exceeding one year, the Company records these costs in proportion to each completed contract performance obligation. For the years ended December 31, 2018, 2019 and 2020, the amount of amortization was $120, $183 and $71, respectively, and there was no impairment loss in relation to costs capitalized. Deferred sales commission amounted to $24 as of  December 31, 2020.

Disaggregation of revenue:

The following table provides information about disaggregated revenue by primary geographical market, major product line and timing of revenue recognition:

	Year ended December 31, 2019						Year ended December 31, 2020
	Licensing and related revenues		Royalties		Total		Licensing and related revenues		Royalties		Total
Primary geographical markets
United States	$	15,203	$	1,424	$	16,627	$	6,716	$	14,097	$	20,813
Europe and Middle East		5,282		16,211		21,493		6,176		5,790		11,966
Asia Pacific		27,405		21,627		49,032		39,621		27,926		67,547
Total	$	47,890	$	39,262	$	87,152	$	52,513	$	47,813	$	100,326
Major product/service lines
Connectivity products (baseband for handset and other devices, Bluetooth, Wi-Fi, NB-IoT, and SATA/SAS)	$	36,471	$	34,206	$	70,677	$	40,748	$	37,917	$	78,665
Smart sensing products (AI, sensor fusion, audio/sound and imaging and vision)		11,419		5,056		16,475		11,765		9,896		21,661
Total	$	47,890	$	39,262	$	87,152	$	52,513	$	47,813	$	100,326
Timing of revenue recognition
Products transferred at a point in time	$	33,794	$	39,262	$	73,056	$	40,075	$	47,813	$	87,888
Products and services transferred over time		14,096		—		14,096		12,438		—		12,438
Total	$	47,890	$	39,262	$	87,152	$	52,513	$	47,813	$	100,326

	Year ended December 31, 2018
	Licensing and related revenues		Royalties		Total
Primary geographical markets
United States	$	6,260	$	2,094	$	8,354
Europe and Middle East		3,672		13,698		17,370
Asia Pacific		30,514		21,639		52,153
Total	$	40,446	$	37,431	$	77,877
Major product/service lines
Connectivity products (baseband for handset and other devices, Bluetooth, Wi-Fi, NB-IoT, and SATA/SAS)	$	30,628	$	35,055	$	65,683
Smart sensing products (AI, sensor fusion, audio/sound and imaging and vision)		9,818		2,376		12,194
Total	$	40,446	$	37,431	$	77,877
Timing of revenue recognition
Products transferred at a point in time	$	30,744	$	37,431	$	68,175
Products and services transferred over time		9,702		—		9,702
Total	$	40,446	$	37,431	$	77,877

Contract balances:

The following table provides information about trade receivables, unbilled receivables and contract liabilities from contracts with customers:

	December 31, 2019		December 31, 2020
Trade receivables	$	11,066	$	14,765
Unbilled receivables (associated with licensing and related revenue)		5,269		5,479
Unbilled receivables (associated with royalties)		11,972		10,980
Deferred revenues (short-term contract liabilities)		3,642		2,434

The Company receives payments from customers based upon contractual payment schedules; trade receivables are recorded when the right to consideration becomes unconditional, and an invoice is issued to the customer. Unbilled receivables associated with licensing and other include amounts related to the Company’s contractual right to consideration for completed performance objectives not yet invoiced. Unbilled receivables associated with royalties are recorded as the Company recognizes revenues from royalties earned during the quarter, but not yet invoiced, either by actual sales data received from customers, or, when applicable, by the Company’s estimation. Contract liabilities (deferred revenue) include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract.

During the year ended December 31, 2020, the Company recognized $3,575 that was included in deferred revenues (short-term contract liability) balance at January 1, 2020.

Practical expediency and exemptions:

The Company generally expenses sales commissions when incurred because the amortization period would have been less than one year. The Company records these costs within sales and marketing expenses on the Company’s consolidated statements of income (loss).

The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.