Revenue

6 Months Ended

Mar. 31, 2024

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,
	2024		2023		2024		2023
North America, primarily the United States	$	72,398	$	77,809	$	152,093	$	161,274
Europe, Middle East & Africa	19,485		20,414		33,875		36,291
Rest of world	15,819		12,921		27,823		22,885
Total revenue	$	107,702	$	111,144	$	213,791	$	220,450

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

	Three months ended March 31,				Six months ended March 31,
	2024		2023		2024		2023
Transferred at a point in time	$	80,574	$	87,088	$	159,968	$	172,574
Transferred over time	27,128		24,056		53,823		47,876
Total revenue	$	107,702	$	111,144	$	213,791	$	220,450

Contract Balances

Contract Related Assets

Our contract related assets consist of subscriber assets. Subscriber assets are equipment that we provide to customers pursuant to subscription-based contracts.  In these cases, we retain the ownership of the equipment a customer uses and charge the customer subscription fees to receive our end-to-end solutions. The total net book value of subscriber assets of $18.5 million and $16.6 million as of March 31, 2024 and September 30, 2023, respectively, are included in property, equipment and improvements, net. Depreciation expense for these subscriber assets, which is included in cost of sales, was $1.2 million and $0.9 million for the three months ended March 31, 2024 and 2023, respectively. Depreciation expense for these subscriber assets, which is included in cost of sales, was $2.2 million and $1.8 million for the six months ended March 31, 2024 and 2023, respectively. We depreciate the cost of this equipment over its useful life.

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, 2024 and September 30, 2023.

Contract Liabilities

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. 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.

Our contract liabilities were $38.0 million and $25.7 million at March 31, 2024 and 2023, respectively.

There were contract liability balances of $35.0 million and $23.0 million balances as of December 31, 2023 and 2022, respectively. Of these balances, Digi recognized $8.3 million and $5.9 million as revenue in the three months ended March 31, 2024 and 2023, respectively. There were contract liability balances of $27.9 million and $21.6 million balances as of September 30, 2023 and 2022, respectively. Digi recognized $13.3 million and $10.6 million as revenue in the six months ended March 31, 2024 and 2023, respectively.

7. REVENUE (CONTINUED)

Remaining Performance Obligation

As of March 31, 2024, we had approximately $151.2 million of remaining performance obligations on contracts with an original duration of one year or more. We expect to recognize revenue on approximately $67.2 million of remaining performance obligations over the next 12 months. We expect to recognize revenue from the remaining performance obligations over a range of two to five years.