Revenue Recognition

Adoption of ASC 606

The cumulative effect of the changes made to our consolidated January 1, 2019 consolidated balance sheet for the adoption of ASC 606 was as follows (in thousands):



	Balances at December 31, 2018			Adjustments from Adoption of ASC 606			Balances at January 1, 2019
	As Restated						As Recast
Assets
Current assets:
Cash and cash equivalents	$	220,728		$	—		$	220,728
Restricted cash	28,657			—			28,657
Short-term investments	104,350			—			104,350
Accounts receivable	88,784			995			89,779
Inventories	135,265			—			135,265
Deferred cost of revenue	43,809			—			43,809
Customer financing receivable	5,594			—			5,594
Prepaid expenses and other current assets	36,747			140			36,887
Total current assets	663,934			1,135			665,069
Property, plant and equipment, net	716,751			—			716,751
Customer financing receivable, non-current	67,082			—			67,082
Restricted cash (non-current)	31,100			—			31,100
Deferred cost of revenue, non-current	45			—			45
Other long-term assets	42,882			2,472			45,354
Total assets	$	1,521,794		$	3,607		$	1,525,401
Liabilities, Redeemable Noncontrolling Interest, Stockholders’ Deficit and Noncontrolling Interest
Current liabilities:
Accounts payable	$	66,889		$	—		$	66,889
Accrued warranty	17,968			(1,032		)	16,936
Accrued expenses and other current liabilities	66,838			—			66,838
Financing obligations	8,128			—			8,128
Deferred revenue and customer deposits	67,632			4,653			72,285
Current portion of recourse debt	8,686			—			8,686
Current portion of non-recourse debt	18,962			—			18,962
Current portion of non-recourse debt from related parties	2,200			—			2,200
Total current liabilities	257,303			3,621			260,924
Derivative liabilities	14,143			—			14,143
Deferred revenue and customer deposits, net of current portion	87,308			17,982			105,290
Financing obligations, non-current	385,650			—			385,650
Long-term portion of recourse debt	360,339			—			360,339
Long-term portion of non-recourse debt	289,241			—			289,241
Long-term portion of recourse debt from related parties	27,734			—			27,734
Long-term portion of non-recourse debt from related parties	34,119			—			34,119
Other long-term liabilities	26,196			—			26,196
Total liabilities	1,482,033			21,603			1,503,636
Redeemable noncontrolling interest	57,261			—			57,261
Stockholders’ deficit:
Common stock: $0.0001 par value; Class A shares and, Class B shares	11			—			11
Additional paid-in capital	2,481,352			—			2,481,352
Accumulated other comprehensive income	131			—			131
Accumulated deficit	(2,624,104		)	(17,996		)	(2,642,100		)
Total stockholders’ deficit	(142,610		)	(17,996		)	(160,606		)
Noncontrolling interest	125,110			—			125,110
Total liabilities, redeemable noncontrolling interest, stockholders' deficit and noncontrolling interest	$	1,521,794		$	3,607		$	1,525,401

In accordance with the ASC 606 requirements, the impact of adoption on our consolidated balance sheet was as follows as of December 31, 2019 (in thousands):



	December 31, 2019
	As Reported		Balances Without Adoption of ASC 606		Effect of Change Higher / (Lower)
Assets
Current assets:
Cash and cash equivalents	$	202,823	$	202,823	$	—
Restricted cash	30,804		30,804		—
Accounts receivable	37,828		47,442		(9,614		)
Inventories	109,606		109,606		—
Deferred cost of revenue	58,470		58,470		—
Customer financing receivable	5,108		5,108		—
Prepaid expenses and other current assets	28,068		27,860		208
Total current assets	472,707		482,113		(9,406		)
Property, plant and equipment, net	607,059		607,059		—
Customer financing receivable, non-current	50,747		50,747		—
Restricted cash, non-current	143,761		143,761		—
Deferred cost of revenue, non-current	6,665		6,665		—
Other long-term assets	41,652		37,849		3,803
Total assets	$	1,322,591	$	1,328,194	$	(5,603	)
Liabilities, Redeemable Noncontrolling Interest, Stockholders’ Deficit and Noncontrolling Interest
Current liabilities:
Accounts payable	$	55,579	$	55,579	$	—
Accrued warranty	10,333		11,952		(1,619		)
Accrued expenses and other current liabilities	70,284		70,284		—
Financing obligations	10,993		10,993		—
Deferred revenue and customer deposits	89,192		90,075		(883		)
Current portion of recourse debt	304,627		304,627		—
Current portion of non-recourse debt	8,273		8,273		—
Current portion of recourse debt from related parties	20,801		20,801		—
Current portion of non-recourse debt from related parties	3,882		3,882		—
Total current liabilities	573,964		576,466		(2,502		)
Derivative liabilities	17,551		17,551		—
Deferred revenue and customer deposits, net of current portion	125,529		84,594		40,935
Financing obligations, non-current	446,165		446,165		—
Long-term portion of recourse debt	75,962		75,962		—
Long-term portion of non-recourse debt	192,180		192,180		—
Long-term portion of non-recourse debt from related parties	31,087		31,087		—
Other long-term liabilities	28,013		28,013		—
Total liabilities	1,490,451		1,452,018		38,433
Redeemable noncontrolling interest	443		443		—
Stockholders’ deficit:
Common stock: $0.0001 par value; Class A shares and, Class B shares	12		12		—
Additional paid-in capital	2,686,759		2,686,759		—



	December 31, 2019
	As Reported			Balances Without Adoption of ASC 606			Effect of Change Higher / (Lower)
Accumulated other comprehensive income	19			19			—
Accumulated deficit	(2,946,384		)	(2,902,348		)	(44,036		)
Total stockholders’ deficit	(259,594		)	(215,558		)	(44,036		)
Noncontrolling interest	91,291			91,291			—
Total liabilities, redeemable noncontrolling interest, stockholders' deficit and noncontrolling interest	$	1,322,591		$	1,328,194		$	(5,603	)

In accordance with ASC 606 requirements, the impact of adoption on our consolidated statement of operations for the year ended December 31, 2019 was as follows (in thousands):



	Year ended December 31, 2019
	As Reported			Balances Without Adoption of ASC 606			Effect of Change Higher / (Lower)
Revenue:
Product	$	557,336		$	601,857		$	(44,521	)
Installation	60,826			54,716			6,110
Service	95,786			91,944			3,842
Electricity	71,229			71,229			—
Total revenue	785,177			819,746			(34,569		)
Cost of revenue:
Product	435,479			436,064			(585		)
Installation	76,487			76,487			—
Service	100,238			106,782			(6,544		)
Electricity	75,386			75,386			—
Total cost of revenue	687,590			694,719			(7,129		)
Gross profit	97,587			125,027			(27,440		)
Operating expenses:
Research and development	104,168			104,168			—
Sales and marketing	73,573			74,973			(1,400		)
General and administrative	152,650			152,650			—
Total operating expenses	330,391			331,791			(1,400		)
Loss from operations	(232,804		)	(206,764		)	(26,040		)
Interest income	5,661			5,661			—
Interest expense	(87,480		)	(87,480		)	—
Interest expense to related parties	(6,756		)	(6,756		)	—
Other income (expense), net	706			706			—
Loss on revaluation of warrant liabilities and embedded derivatives	(2,160		)	(2,160		)	—
Loss before income taxes	(322,833		)	(296,793		)	(26,040		)
Income tax provision	633			633			—
Net loss	(323,466		)	(297,426		)	(26,040		)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests	(19,052		)	(19,052		)	—
Net loss attributable to Class A and Class B common stockholders	(304,414		)	(278,374		)	(26,040		)
Less: deemed dividend to noncontrolling interest	(2,454		)	(2,454		)	—
Net loss available to Class A and Class B common stockholders	$	(306,868	)	$	(280,828	)	$	(26,040	)
Net loss per share available to Class A and Class B common stockholders, basic and diluted	$	(2.67	)	$	(2.44	)	$	(0.23	)

The impact of the adoption of ASC 606 on our consolidated statement of cash flows for the year ended December 31, 2019, relating to cash flows from operating activities was an increase to net loss of $26.0 million which was offset by a decrease in accounts receivable of $10.6 million, increases in prepaid expenses and other current assets of $0.1 million, and increases in other long-term assets of $1.3 million. These sources of cash from changes in operating assets were partially offset by increases in deferred revenue and customer deposits of $17.4 million and a decrease in accrued warranty of $0.6 million. There is no net impact on operating activities and no impact in investing and financing activities.

Contract Liabilities

Deferred revenue and customer deposits activity related to the adoption of ASC 606 consisted of the following (in thousands):



	Year ended 12/31/2018 (As Restated)			Impacts of ASC606 Adoption			As of 1/1/2019 (As Recast)			As of 12/31/2019 (As Recast)
Deferred revenue	$	(141,458	)	$	(8,154	)	$	(149,612	)	$	(175,619	)
Customer deposits	(13,482		)	(14,481		)	(27,963		)	(39,101		)
Deferred revenue and customer deposits	$	(154,940	)	$	(22,635	)	$	(177,575	)	$	(214,720	)

Deferred revenue activity during the year ended December 31, 2019 after the ASC 606 adoption consisted of the following (in thousands):



	Year Ended December 31, 2019
	As Reported
Deferred revenue on January 1, 2019	$	149,612
Additions	709,843
Revenue recognized	(683,836		)
Deferred revenue on December 31, 2019	$	175,619

Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of December 31, 2019. These performance obligations relate to the provision of maintenance services under current contracts and future renewal periods which provide customers with material rights over a period that we estimate will 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 cost-to-cost basis that reflects the cost of providing these services.

Revenue by source

We disaggregate revenue from contracts with customers into four revenue categories: (i) product, (ii) installation, (iii) services and (iv) electricity, as shown below (in thousands):



	Years Ended December 31,
	2019		2018
	As Reported, With Adoption of ASC 606		As Reported, Under ASC 605
Revenue from contracts with customers:
Product revenue	$	557,336	$	400,638
Installation revenue	60,826		68,195
Services revenue	95,786		83,267
Electricity revenue	10,840		23,023
Total revenue from contract with customers	724,788		575,123
Revenue from contracts accounted for as leases:
Electricity revenue	60,389		57,525
Total revenue	$	785,177	$	632,648

For the year ended December 31, 2019, approximately 77% of our revenues are from the United States and 23% comes from the Asia Pacific region.