Revenue from Contracts with Customers

6 Months Ended

Jun. 27, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

The Company derives revenue from contracts with customers primarily from the following and categorizes its revenue as follows:

•Systems include revenue from the sale of access and premises systems, software platform licenses and cloud-based software subscriptions; and

•Services include revenue from professional services, customer support, software- and cloud-based maintenance, extended warranty subscriptions, training and managed services.

The following is a summary of revenue disaggregated by geographic region based upon the location of the customers (in thousands):

	Three Months Ended				Nine Months Ended
	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
United States	$	108,198	$	85,837	$	196,248	$	161,622
Canada	2,868		3,317		6,989			6,732
Middle East	2,330		5,949		4,631			9,700
Caribbean	2,310		501		5,873			2,767
Europe	2,110		2,471			4,482		4,910
Other	1,207		2,229		2,482			3,923
	$	119,023	$	100,304	$	220,705	$	189,654

Contract Asset

The primary contract asset is revenue recognized on professional services contracts where the services are transferred to the customer over time, which has yet to be billed, and is classified within accounts receivable. Amounts are billed in accordance with the agreed-upon contractual terms. The balance at December 31, 2019 was $5.0 million of which $1.6 million remained in the Company's Condensed Consolidated Balance Sheet at June 27, 2020. The closing balance at June 27, 2020 was $4.0 million of which the Company expects to bill 52% of the balance during the remainder of 2020. The decrease in the contract asset was driven by billings for past services as well as the timing and volume of professional services contracts during the six months ended June 27, 2020.

Contract Liability

Deferred revenue consisted of the following (in thousands):

	June 27, 2020		December 31, 2019
Current:
Products and services	$	12,587	$	12,480
Extended warranty	3,772		4,678
	16,359		17,158
Long-term:
Products and services	1,786		790
Extended warranty	16,406		17,550
	18,192		18,340
	$	34,551	$	35,498

The decrease in the deferred revenue balance for the three and six months ended June 27, 2020 is primarily driven by $7.4 million and $13.4 million of revenue recognized that was included in the deferred revenue balance at the beginning of each period, respectively, offset by cash payments received or due in advance of satisfying the Company's performance obligations.

Revenue allocated to remaining performance obligations represent contract revenue that has not yet been recognized for contracts greater than one year, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. This amount was $62.3 million as of June 27, 2020, and the Company expects to recognize 45% of such revenue over the next 12 months and the remainder thereafter.

Contract Costs

The Company capitalizes certain sales commissions related primarily to extended warranty support for which the expected amortization period is greater than one year. As of June 27, 2020, the unamortized balance of deferred commissions was $0.7 million. For the three and six months ended June 27, 2020, the amount of amortization was less than $0.1 million, and there was no impairment loss in relation to the costs capitalized.

Concentration of Customer Risk

CenturyLink, Inc. represented 15% of total revenue for each of the three and six months ended June 27, 2020, and 17% and 15% for the three and six months ended June 29, 2019, respectively. No other customers accounted for more than 10% of the Company’s total revenue for these periods.

CenturyLink, Inc. accounted for 19% of the Company's accounts receivable as of June 27, 2020 and 17% as of December 31, 2019.