Revenue Recognition

12 Months Ended

Oct. 31, 2021

Revenue Recognition

Revenue Recognition

Note 2. Revenue Recognition

Contract Balances

Contract assets as of October 31, 2021 and 2020 were $20.5 million and $16.9 million, respectively. The contract assets relate to the Company’s rights to consideration for work completed but not billed. These amounts are included on a separate line item as Unbilled receivables, and balances expected to be billed later than one year from the balance sheet date are included within Other assets on the accompanying Consolidated Balance Sheets. The net change in contract assets represents amounts recognized as revenue offset by customer billings.  For the years ended October 31, 2021 and 2020, a total of $5.2 million and $5.9 million, respectively, was transferred to accounts receivable from contract assets recognized at the beginning of the period.

Contract liabilities as of October 31, 2021 and 2020 were $36.7 million and $41.9 million, respectively. The contract liabilities relate to the advance billings to customers for services that will be recognized over time and in some instances for deferred revenue relating to license performance obligations that will be recognized at a future point in time. The Company discontinued revenue recognition of the deferred license revenue related to the License Agreements in July 2020 given the then pending arbitrations. As of October 31, 2021 and 2020, $22.2 million related to the License Agreements is included within Long-term deferred revenue on the accompanying Consolidated Balance Sheets. As a result of the Settlement Agreement and the anticipated sale of modules to KFC under the Settlement Agreement (Refer to Note 24. “Subsequent Events” for additional details), the Company will evaluate the future revenue recognition of this deferred revenue in the first quarter of fiscal year 2022.

The net change in contract liabilities represents customer billings offset by revenue recognized.

Remaining Performance Obligations

Remaining performance obligations are the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of October 31, 2021, the Company’s total remaining performance obligations for service agreements was $125.9 million, for license agreements was $22.2 million and for Advanced Technologies contracts was $40.8 million. Service revenue in periods in which there are no module exchanges is expected to be relatively consistent from period to period, whereas module exchanges will result in an increase in revenue when replacements occur.