PRODUCT AND GEOGRAPHIC INFORMATION (Notes)

12 Months Ended

Dec. 31, 2020

REVENUE Revenue Components and Performance Obligations

Video Products and Solutions

We offer a wide range of video products and solutions in connection with our sales of storage and workflow solutions, our media management solutions, and our video creative tools, which include our Media Composer, NEXIS, Airspeed, Maestro, and MediaCentral product lines that consist of software licenses or integrated hardware and software solutions. We sell these products to customers under a contract or signed quote and payment terms are generally 30 to 60 days from delivery. Each individual product sold to a customer represents a distinct performance obligation for us and revenue is recognized at the point in time when control of the product transfers, which is typically when the product is shipped to the customer or, in the case of certain software licenses, when the software license term commences and is accessible by the customer.

Audio Products and Solutions

We offer a wide range of audio products and solutions in connection with our sales of digital audio software and workstation solutions and our control surfaces, consoles and live-sound systems, which include our Pro Tools, Pro Tools HD, Pro Tools | S6, VENUE | S6L, and Sibelius product lines that consist of software licenses or integrated hardware and software solutions. We sell these products to customers under a contract or signed quote and payment terms are generally 30 to 60 days from delivery. Each individual product sold to a customer represents a distinct performance obligation for us and revenue is recognized at the point in time when control of the product transfers, which is typically when the product is shipped to the customer or, in the case of certain software licenses, when the software license term commences and is accessible by the customer.

Subscription Services

We offer subscription versions of many of our software products with monthly, annual and multi-year terms. While we are beginning to offer subscription versions for most of our product portfolio in connection with our cloud strategy, current subscription sales primarily consist of our Media Composer, Pro Tools, and Sibelius offerings. We sell these products to customers under standard terms and conditions and payment is due upfront, except for webstore transactions which are billed monthly. Contract assets for annual and multi-year subscriptions billed monthly are recorded on our balance sheet upon customer commitment, net of expected early cancellations where we estimate variable consideration based on historical experience. Subscription services have several performance obligations, including a right to use the software and stand-ready performance obligations to (i) provide unspecified bug fixes and software enhancements, or Software Updates, and (ii) call support when and if needed. The estimated SSP of the right to use the licensed software is recognized at a point in time once control has been transferred and the customer has the ability to access the software. Stand-ready performance obligations related to Software Updates and call support are satisfied over time and revenue is recognized ratably over the term of the subscription.

Support Services

We offer support contracts, which are typically annual, for our video and audio products. Support contracts for individual products are sold bundled with initial product offerings or as renewals once initial contracts have lapsed. Support contracts are also sold on an enterprise basis where a customer purchases support for all Avid products owned. Support contracts are provided under our standard terms and conditions and payment is due in advance of the support being provided. Support contracts include stand-ready performance obligations to provide (i) Software Updates, (ii) call support, and (iii) hardware maintenance. Support contract performance obligations are satisfied over time and revenue is recognized ratably over the term of the support contract.

Historically, for many of our products, we had an ongoing practice of making when-and-if-available Software Updates available to customers free of charge for a period of time after initial sales to customers. The expectation created by this practice represents an implied performance obligation of a form of post-contract customer support (“Implied Maintenance Release PCS”) which represents a performance obligation. While we have ceased providing Implied Maintenance Release PCS on new product offerings, we continue to provide Implied Maintenance Release PCS for older products that were predominately sold in prior years. Revenue attributable to Implied Maintenance Release PCS performance obligations is recognized over time on a ratable basis over the period that Implied Maintenance Release PCS is expected to be provided, which is typically six years.

Professional Services, Training, and Other

We sell a variety of professional services, training, and other services that complement product and support offerings. Professional services consist primarily of standard configuration, commissioning (i.e., setting up equipment purchased) and on-air

support (i.e., monitoring a customer’s production environment available during initial system go-live, live sporting events, etc.) and providing customization services for some of our products. We also offer training and certification programs for many of our products and workflows. Other revenues include shipping and handling charges and reimbursable travel expenses. We sell professional services, training and other services under a contract or signed quote, and for larger projects, statements of work that outline the customer’s specifications and requirements. Services are primarily sold on a time and materials basis, however, fixed fee arrangements are also executed from time to time. Payments are generally billed upon completion of the service or, for larger projects, on an installment basis as services are rendered. While the nature of service deliverables can vary significantly, each service deliverable generally represents a distinct performance obligation and revenue is recognized over time, typically in proportion of the total hours incurred as a percentage of total estimated hours required to complete the project.

Enterprise Agreements

From time to time, we enter into enterprise wide agreements whereby the customer agrees to purchase specified products and services from us over an extended period of time, often for a single fixed contractual price. For such agreements, management identifies each performance obligation in the contract and allocates the total contract price to each performance obligation based on relative estimated SSP. Once the transaction price is allocated to individual performance obligations, the components are recognized in the respective categories of revenue above consistent with the timing of the recognition of performance obligations described therein.

Disaggregated Revenue and Geography Information

The following is a summary of our revenues by type for the years ended December 31, 2020, 2019, and 2018 (in thousands):


	Year Ended December 31,
	2020		2019		2018
Video products and solutions net revenues	$	77,232	$	131,225	$	132,276
Audio products and solutions net revenues	63,530		76,220		72,831
Products and solutions net revenues	140,762		207,445		205,107
Subscription services	72,831		45,181		35,888
Support services	124,175		130,443		139,205
Professional services, training and other services	22,698		28,719		33,082
Services net revenues	219,704		204,343		208,175
Total net revenues	$	360,466	$	411,788	$	413,282

The following table sets forth our revenues by geographic region for the years ended December 31, 2020, 2019, and 2018 (in thousands):


	Year Ended December 31,
	2020		2019		2018
Revenues:
United States	$	143,518	$	152,012	$	150,877
Other Americas	24,026		32,783		27,494
Europe, Middle East and Africa	142,370		161,764		172,238
Asia-Pacific	50,552		65,229		62,673
Total net revenues	$	360,466	$	411,788	$	413,282

Contract Asset

Contract asset activity for the years ended December 31, 2020 and 2019 was as follows (in thousands):


	December 31, 2020		December 31, 2019
Contract asset at January 1, 2020	$	19,494	$	16,513
Revenue in excess of billings	32,005		30,715
Customer billings	(32,920)		(27,734)
Contract asset at December 31, 2020	$	18,579	$	19,494

The decrease in contract assets during the year ended December 31, 2020 is due to the timing of payments due under our enterprise network agreements which predominately are payable annually, whereas performance obligations are fulfilled on a continuous basis partially offset by continued growth in our subscription offerings.

Deferred Revenue

Deferred revenue activity for the years ended December 31, 2020 and 2019 was as follows (in thousands):


	December 31, 2020		December 31, 2019
Deferred revenue at January 1, 2020	$	97,901	$	99,601
Billings deferred	72,633		76,665
Recognition of prior deferred revenue	(71,276)		(78,365)
Deferred revenue at December 31, 2020	$	99,258	$	97,901

A summary of the performance obligations included in deferred revenue as of December 31, 2020 is as follows (in thousands):


	December 31, 2020
Product	$	6,636
Subscription	5,736
Support Contracts	75,555
Implied Maintenance Release PCS	8,426
Professional services, training and other	2,905
Deferred revenue at December 31, 2020	$	99,258

Remaining Performance Obligations

For transaction prices allocated to remaining performance obligations, we apply practical expedients and do not disclose quantitative or qualitative information for remaining performance obligations (i) that have original expected durations of one year or less and (ii) where we recognize revenue equal to what we have the right to invoice and that amount corresponds directly with the value to the customer of our performance to date.

We have remaining performance obligations of $8.4 million attributable to Implied Maintenance Release PCS recorded in deferred revenue as of December 31, 2020. We expect to recognize revenue for these remaining performance obligations of $3.4 million, $2.1 million, $1.4 million, $0.9 million, and $0.5 million for the years ended December 31, 2021, 2022, 2023, 2024, and 2025, respectively, and $0.1 million thereafter.

As of December 31, 2020, we had approximately $46.2 million of transaction price allocated to remaining performance obligations for certain enterprise agreements that have not yet been invoiced and are therefore not recorded as deferred revenue on our balance sheet. Unbilled remaining performance obligations represent obligations we have to deliver for specific products and services in the future where there is not yet an enforceable right to invoice the customer. Our unbilled remaining performance obligations do not include contractually committed minimum purchases that are common in our strategic purchase agreements with resellers since our specific obligations to deliver products or services is not yet known, as customers may satisfy such commitments by purchasing an unknown combination of current or future product offerings. While the timing of fulfilling individual performance obligations under the contracts can vary dramatically based on customer requirements, we expect to recognize the $53.3 million in installments through 2026.

Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations due to contract breach, contract amendments and changes in the expected timing of delivery.