American Bitcoin Corp. Revenue Disclosure

Note 5 – Revenue and Contracts with Customers

   
Disaggregation of Revenue 

 

We derive the majority of our revenue from subscription fees paid for access to and usage of our SaaS solutions for a specified period of time, typically one to three years. In addition to subscription fees, contracts with customers may include implementation fees for launch assistance and training. Fixed subscription and implementation fees are billed in advance of the subscription term and are due in accordance with contract terms, which generally provide for payment within 30 days. Our contracts typically have a one to three year term. Our contractual arrangements include performance, termination and cancellation provisions, but do not provide for refunds. Customers do not have the contractual right to take possession of the Company’s software at any time.  

 

The following table summarizes our revenue disaggregation by customer type for the following periods:

 

			For the Years Ended December 31,
			2023				2022
Government			$	2,564,846			$	3,357,978
Non-government				4,271,598				7,100,192
			$	6,836,444			$	10,458,170

 

Accounts Receivable from Customers

 

Our accounts receivable from customers, net of an allowance for expected credit losses, were $147,855 and $429,949 as of December 31, 2023 and 2022 including $219,912, or 51 percent, as of December 31, 2022 attributable to two government clients. There were no amounts receivable from government clients as of December 31, 2023.

 

The allowance for expected credit losses was comprised of the following activity:

   

		For the Years Ended December 31,
		2023				2022
Allowance for expected credit losses at beginning of period		$	331,262			$	305,517
Bad debt expense (1)			63,358				415,009
Write-off uncollectable accounts			(377,148	)			(389,264	)
Allowance for expected credit losses at end of period		$	17,472			$	331,262

 

(1)	Bad debt expense is recognized as a component of General and administrative expenses. Includes amounts attributable to unbilled accounts receivable (see Note 7).

 

Contracts with Multiple Performance Obligations

  

Customers may elect to purchase a subscription to multiple modules, multiple modules with multiple service levels, or, for certain of our solutions. We evaluate such contracts to determine whether the services to be provided are distinct and accordingly should be accounted for as separate performance obligations. If we determine that a contract has multiple performance obligations, the transaction price, which is the total price of the contract, is allocated to each performance obligation based on a relative standalone selling price method. We estimate standalone selling price based on observable prices in past transactions for which the product offering subject to the performance obligation has been sold separately. As the performance obligations are satisfied, revenue is recognized as discussed above in the product descriptions. 

 

Transaction Price Allocated to Future Performance Obligations

 

As many of the contracts we have entered into with customers are for a twelve-month subscription term, a significant portion of performance obligations that have not yet been satisfied as of December 31, 2023 are part of a contract that has an original expected duration of one year or less. For contracts with an original expected duration of greater than one year, for which the practical expedient does not apply, the aggregate transaction price allocated to the unsatisfied performance obligations was $2.5 million as of December 31, 2023, of which $2.4 million is expected to be recognized as revenue over the next twelve months.   

 

Deferred Revenue 

 

Deferred revenue represents the unearned portion of subscription and implementation fees. Deferred revenue is recorded when cash payments are received in advance of performance. Deferred amounts are generally recognized within one year. Deferred revenue is included in the accompanying consolidated balance sheets under Total current liabilities, net of any long-term portion that is included in noncurrent liabilities. The following table summarizes deferred revenue activity for the year ended December 31, 2023:  

 

		Beginning of Period				Net additions				Revenue recognized				End of Period
Deferred revenue - 2023		$	730,574				2,802,913				3,133,835			$	399,652
Deferred revenue - 2022			1,040,010				5,446,403				5,755,839				730,574

 

Of the $6.8 million and $10.5 million of revenue recognized during the years ended December 31, 2023 and 2022, $0.5 million and $1.2 million was included in deferred revenue as of December 31, 2022 and 2021, respectively.

 

Costs to Obtain Contracts

 

We capitalize sales commissions that are directly related to obtaining customer contracts and that would not have been incurred if the contract had not been obtained. These costs are included in the accompanying consolidated balance sheets and are classified as a component of Prepaid expenses and other current assets. Deferred contract costs are amortized to Sales and marketing expense over the expected period of benefit, which we have determined to be one year based on the estimated customer relationship period. The following table summarizes deferred contract cost activity for the year ended December 31, 2023:  

 

		Beginning of Period				Additions				Amortized costs (1)				End of Period
Deferred contract costs - 2023		$	36,465				—				36,465			$	—
Deferred contract costs - 2022			142,930				124,690				231,155				36,465

 

(1)	Includes contract costs amortized to Sales and marketing expense during the period.