Note 3 - Revenue Recognition

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

3. Revenue Recognition

The following table presents revenue disaggregated by type and geography:

	Three Months Ended March 31,
	2024		2023
	(in thousands)
U.S.
Instruments and accessories	$	51	$	60
Services		87		75
Leases		68		71
Total U.S. revenue		206		206
Outside of U.S. ("OUS")
Instruments and accessories		262		233
Services		198		120
Leases		457		417
Total OUS revenue		917		770
Total
Instruments and accessories		313		293
Services		285		195
Leases		525		488
Total revenue	$	1,123	$	976

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations relates to amounts allocated to products and services for which the revenue has not yet been recognized. A significant portion of this amount relates to service obligations performed under the Company's system sales contracts that will be invoiced and recognized as revenue in future periods. The transaction price allocated to remaining performance obligations as of March 31, 2024 was $0.8 million, which is expected to be recognized over one to four years. 

Contract Assets and Liabilities

Deferred revenue for the periods presented was primarily related to service obligations, for which the service fees are billed up-front, generally annually. The associated deferred revenue is generally recognized ratably over the service period. The Company did not have any significant impairment losses on its contract assets (included in accounts receivable, net in the consolidated balance sheets) for the periods presented.

Revenue recognized for the three months ended March 31, 2024 and 2023 that was included in the deferred revenue balance at the beginning of each reporting period was $0.2 million, which was included in the deferred revenue balance of $0.7 million and $0.5 million as of December 31, 2023, and 2022, respectively.

The following information summarizes the Company’s contract assets and liabilities:

	March 31, 2024		December 31, 2023
	(in thousands)
Contract assets	$	74	$	95
Deferred revenue	$	769	$	711

Senhance System Leasing

The Company enters into lease arrangements with certain qualified customers. Revenue related to arrangements including lease elements are allocated to lease and non-lease elements based on their relative standalone selling prices. Lease elements generally include a Senhance System, while non-lease elements generally include instruments, accessories, and services. For some lease arrangements, the customers are provided with the right to purchase the leased Senhance System at some point during and/or at the end of the lease term. In some arrangements lease payments are based on the usage of the Senhance System. For the three months ended March 31, 2024, and 2023, variable lease revenue related to usage-based arrangements was not material.  

Accounts Receivable

Accounts receivable are recorded at net realizable value, which includes an allowance for expected credit losses. The allowance for expected credit losses is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The allowance for expected credit losses was $1.6 million as of March 31, 2024 and December 31, 2023. The Company recorded immaterial amounts for expected credit losses during the three months ended March 31, 2024 and 2023.

The Company had three customers that accounted for 23%, 15% and 12%, respectively of the Company’s net accounts receivable as of March 31, 2024. The Company had one customer that accounted for 83% of the Company’s net accounts receivable as of December 31, 2023.