Revenue Recognition

6 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 5. Revenue Recognition

Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer.

Product revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract.

Service revenue is generally recognized over time as the services are rendered to the customer based on the extent of progress towards completion of the performance obligation. The Company recognizes service revenue over the term of the service contract. Services are expected to be transferred to the customer throughout the term of the contract and the Company believes recognizing revenue ratably over the term of the contract best depicts the transfer of value to the customer. Revenue generated from preventative maintenance calls is recognized at a point in time when the services are provided to the customer.

Revenue from the sale of products and services are evidenced by either a contract with the customer or a valid purchase order and an invoice which includes all relevant terms of sale and shipment of product or service provided has been incurred. The Company performs a review of each specific customer's credit worthiness and ability to pay prior to acceptance as a customer. Further, the Company performs periodic reviews of its customers' creditworthiness prospectively.

Disaggregation of Revenue

Revenue is disaggregated from contracts between product revenue and service and other revenue and by geography, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. The Company generally sells its products and services through a direct sales force in the U.S. and Germany and through direct sales and distribution agreements in other international markets outside the U.S. (e.g., Japan, Europe, Canada, Latin America, Asia-Pacific, Middle East).

The following table disaggregates the Company’s revenue by products and services and other:

	For the Three Months Ended September 30,				For the Six Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)				(in thousands)
Product revenue	$	253,246	$	235,785	$	517,717	$	477,259
Service and other revenue		12,675		12,357		25,353		23,468
Total revenue	$	265,921	$	248,142	$	543,070	$	500,727

The following table disaggregates the Company’s revenue by geographic location:

	For the Three Months Ended September 30,				For the Six Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)				(in thousands)
United States	$	218,943	$	200,485	$	445,462	$	407,627
Europe		30,269		32,527		64,105		64,764
Japan		12,467		12,267		25,702		23,552
Rest of world		4,242		2,863		7,801		4,784
Outside the U.S.		46,978		47,657		97,608		93,100
Total revenue	$	265,921	$	248,142	$	543,070	$	500,727

Variable Consideration

Returns Reserve

The Company estimates an allowance for future sales returns based on historical return experience, which requires judgment. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates product return liabilities using the expected value method based on its historical sales information and other factors that it believes could significantly impact its expected returns. The Company’s returns reserve was not material as of September 30, 2022 and March 31, 2022.

Rebates and Discounts

The Company provides certain customers with rebates and discounts that are defined in the Company’s contractual arrangements with customers and are recorded as a reduction of revenue in the period the related revenue is recognized with a corresponding liability recorded and included in accrued expenses in the accompanying condensed consolidated balance sheets. Rebates normally result from performance-based offers that are primarily based on attaining contractually specified sales volumes as well as product usage. Discounts are normally from early payment incentives. The Company estimates the amount of rebates and discounts based on an estimate of the third-party’s sales and the respective rebate or discount defined in the customer contractual arrangement.

Contract Balances

Contract balances represent amounts presented in the condensed consolidated balance sheets when either the Company has transferred goods or services to the customer, or the customer has paid consideration to the Company under the contract. These contract balances include trade accounts receivable and deferred revenue.

Deferred Revenue

The Company’s deferred revenue balance was $26.0 million and $26.4 million as of September 30, 2022 and March 31, 2022, respectively. The deferred revenue balance is comprised of product shipments in which the Company recognizes revenue when the customer obtains control of the product, and preventative maintenance service contracts in which revenue is recognized ratably over the term of the service contract. During the three and six months ended September 30, 2022, the Company recognized $6.4 million and $20.1 million of revenue, respectively, that was included in the deferred revenue balance as of March 31, 2022. During the three and six months ended September 30, 2021, the Company recognized $9.9 million and $21.0 million of revenue, respectively, that was included in the deferred revenue balance as of March 31, 2021.

Costs to Obtain or Fulfill a Customer Contract

The Company has certain costs to obtain and fulfill a customer contract, such as commissions and shipping costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. These costs are included in selling, general, and administrative expenses.