Revenue

6 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

Revenue Disaggregation

The following table summarizes our revenue by geographic location of our customers (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2023		2022		2023		2022
North America, primarily the United States	$	77,809	$	73,790	$	161,274	$	140,033
Europe, Middle East & Africa	20,414		14,715		36,291		24,874
Rest of world	12,921		6,208		22,885		14,063
Total revenue	$	111,144	$	94,713	$	220,450	$	178,970

The following table summarizes our revenue by the timing of revenue recognition (in thousands):

	Three months ended March 31,				Six months ended March 31,
	2023		2022		2023		2022
Transferred at a point in time	$	87,088	$	72,656	$	172,574	$	139,191
Transferred over time	24,056		22,057		47,876		39,779
Total revenue	$	111,144	$	94,713	$	220,450	$	178,970

Contract Balances

Contract Related Assets

Our contract related assets consist of subscriber assets, which are equipment that we provide to customers pursuant to subscription-based contracts.  In these cases, we retain the ownership of the equipment that the customer uses and charge them subscription fees to receive our end-to-end solutions. The total net book value of subscriber assets of $17.3 million and $16.5 million as of March 31, 2023 and September 30, 2022, respectively, are included in property, equipment and improvements, net. Depreciation expense for these subscriber assets, which is included in cost of sales, was $0.9 million and $1.1 million for the three months ended March 31, 2023 and 2022, respectively. Depreciation expense for these subscriber assets $1.8 million and $1.9 million for the six months ended March 31, 2023 and 2022, respectively. We depreciate the cost of this equipment over its useful life.

9. REVENUE (CONTINUED)

Contract Assets

Contract assets at Digi consist of products and services that have been fulfilled, but for which revenue has not yet been recognized. Our contract asset balances were immaterial as of March 31, 2023 and September 30, 2022.

Contract Liabilities

The timing of revenue recognition may differ from the timing of invoicing to customers. Customers are invoiced for subscription services on a monthly, quarterly or annual basis. Contract liabilities consist of unearned revenue related to annual or multi-year contracts for subscription services and related implementation fees, as well as product sales that have been invoiced, but not yet fulfilled.

Our contract liabilities were $25.7 million and $24.8 million at March 31, 2023 and 2022, respectively.

Of the $23.0 million and $24.3 million balances as of December 31, 2022 and 2021, Digi recognized $5.9 million and $5.0 million as revenue in the three months ended March 31, 2023 and 2022, respectively. Of the $21.6 million and $15.5 million balances as of September 30, 2022 and 2021, Digi recognized $10.6 million and $10.0 million as revenue in the six months ended March 31, 2023 and 2022, respectively.

Remaining Transaction Price

As of March 31, 2023, we had approximately $106.5 million of remaining performance obligations on contracts with an original duration of one year or more. We expect to recognize revenue on approximately $54.6 million of remaining performance obligations over the next 12 months. Revenue from the remaining performance obligations we expect to recognize over a range of two to five years.