Revenue Recognition

9 Months Ended

Dec. 31, 2021

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 is 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.

If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately.  

Disaggregation of Revenue

Revenue is disaggregated 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 (e.g., Japan, Europe, Canada, Latin America, Asia-Pacific, Middle East).

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

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
		2021		2020		2021		2020
	(in thousands)				(in thousands)
Product revenue	$	249,065	$	220,883	$	726,324	$	575,977
Service and other revenue		12,111		10,780		35,579		30,300
Total revenue	$	261,176	$	231,663	$	761,903	$	606,277

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

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
		2021		2020		2021		2020
	(in thousands)				(in thousands)
U.S.	$	211,957	$	189,116	$	619,585	$	495,988
Europe		32,379		28,630		97,143		73,638
Japan		14,021		12,012		37,572		31,308
Rest of world		2,819		1,905		7,603		5,343
Total revenue	$	261,176	$	231,663	$	761,903	$	606,277

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, including product discontinuations, product recalls and expirations, of which it becomes aware. The Company’s cost of replacing defective products has not been material and is accounted for at the time of replacement. The Company’s returns reserve as of December 31, 2021 and March 31, 2021, was not material.

Rebates and Discounts  

The Company provides certain customers with rebates and discounts that are defined in the Company’s contract arrangements with customers and are recorded as a reduction of revenue in the period the related revenue is recognized, resulting in a reduction to revenue and the establishment of a liability, which are all included in accrued expenses in the accompanying consolidated balance sheet. 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. Revenue adjustments that relate to performance obligations satisfied in prior periods during the three and nine months ended December 31, 2021 and 2020, were not material.

Contract Balances

Deferred Revenue

The Company’s deferred revenue balance was $24.9 million and $24.3 million as of December 31, 2021 and March 31, 2021, respectively. The deferred revenue balance is due to the timing of product shipment and completion of recognizing revenue when the customer obtains control of the product, and additional preventative maintenance service contracts and the subsequent recognition of

the contract ratably over the term of the service contract. The Company recognized $3.6 million and $21.6 million of revenue during the three and nine months ended December 31, 2021, respectively, that was included in the deferred revenue balance as of March 31, 2021. The Company recognized $3.0 million and $17.6 million of revenue during the three and nine months ended December 31, 2020, that was included in the deferred revenue balance as of March 31, 2020.