Revenue Recognition

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Contract Balances

The following table provides information about accounts receivables, contract assets, customer deposits and deferred revenue from contracts with customers (in thousands):

	September 30,		December 31,
	2023		2022
Accounts receivable	$	334,495	$	250,995
Contract assets	143,875		46,727
Customer deposits	66,043		121,085
Deferred revenue	67,613		94,355

Contract assets relate to contracts for which revenue is recognized upon transfer of control of performance obligations, but where billing milestones have not been reached. Customer deposits and deferred revenue include payments received from customers or invoiced amounts prior to transfer of controls of performance obligations. At December 31, 2022, customer deposits included $24.6 million related to transactions with SK ecoplant, and refundable fees received from customers. At September 30, 2023 there were no customer deposits related to transactions with SK ecoplant (see Note 16 - SK ecoplant Strategic Investment).

Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current in the condensed consolidated balance sheets when both the milestones other than the passage of time, are expected to be complete and the customer is invoiced within one year of the balance sheet date, and as long-term when both the above-mentioned milestones are expected to be complete, and the customer is invoiced more than one year out from the balance sheet date. Contract liabilities are classified as current in the condensed consolidated balance sheets when the revenue recognition associated with the related customer payments and invoicing is expected to occur within one year of the balance sheet date and as long-term when the revenue recognition associated with the related customer payments and invoicing is expected to occur in more than one year from the balance sheet date.

Contract Assets

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Beginning balance	$	35,182	$	33,374	$	46,727	$	25,201
Transferred to accounts receivable from contract assets recognized at the beginning of the period	(8,284)		(21,677)		(31,968)		(21,304)
Revenue recognized and not billed as of the end of the period	116,977		14,071		129,116		21,871
Ending balance	$	143,875	$	25,768	$	143,875	$	25,768

Contract assets as of September 30, 2023 were primarily related to the PPA V Upgrade. For additional information, please see Part I, Item 1, Note 10 - Portfolio Financings.

Deferred Revenue

Deferred revenue activity, including deferred incentive revenue activity, during the three and nine months ended September 30, 2023 and 2022 consisted of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Beginning balance	$	85,110	$	96,377	$	94,355	$	115,476
Additions	243,545		248,574		733,891		597,318
Revenue recognized	(261,042)		(241,795)		(760,633)		(609,638)
Ending balance	$	67,613	$	103,156	$	67,613	$	103,156

Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the end of the period. Primary component of deferred revenue at the end of the period consists of performance obligations relating to the provision of maintenance services under current contracts and future renewal periods. Some of these obligations provide customers with material rights over a period that we estimate to be largely commensurate with the period of their expected use of the associated Energy Server. As a result, we expect to recognize these amounts as revenue over a period of up to 21 years, predominantly on a relative standalone selling price basis that reflects the cost of providing these services. Deferred revenue also includes performance obligations relating to product acceptance and installation. A significant amount of this deferred revenue is reflected as additions and revenue recognized in the same 12-month period, and a portion of this deferred revenue is expected to be recognized beyond this 12-month period mainly due to deployment schedules.

We do not disclose the value of the unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Disaggregated Revenue

We disaggregate revenue from contracts with customers into four revenue categories: product, installation, services and electricity (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue from contracts with customers:
Product revenue	$	304,976	$	213,243	$	713,427	$	520,415
Installation revenue	21,916		22,682		66,762		48,964
Services revenue	47,535		37,347		130,496		111,012
Electricity revenue	9,012		2,875		16,816		8,352
Total revenue from contract with customers	383,439		276,147		927,501		688,743
Revenue from contracts that contain leases:
Electricity revenue	16,829		16,127		49,053		47,806
Total revenue	$	400,268	$	292,274	$	976,554	$	736,549