Revenue from Contracts with Customers
Contract Asset
Contract assets include amounts recognized as revenue prior to our contractual right to bill the customer and are included in “Prepaid expenses and other current assets” in our Consolidated Balance Sheets. Amounts are billed in accordance with the agreed-upon contractual terms. The balance as of December 31, 2025 was $4.8 million of which we expect to bill 20% of the balance during 2026. The balance as of December 31, 2024 was $2.8 million.
Contract Liability
Deferred revenue was $50.3 million and $47.6 million as of December 31, 2025 and 2024, respectively. The increase in deferred revenue of $2.7 million is primarily driven by cash payments received or due in advance of satisfying our performance obligations partially offset by revenue recognized of $20.1 million that was included in the deferred revenue balance at the beginning of the year.
Revenue allocated to remaining performance obligations (“RPOs”) represents contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods but excludes variable consideration where the monthly invoicing is based on usage or where actual usage exceeds the minimum commitment. RPOs were $385.0 million as of December 31, 2025, and we expect to recognize as revenue 39% of this amount over the next 12 months and a large majority of the remainder over the two years thereafter.
Contract Costs
We capitalize certain sales commissions related primarily to multi-year subscriptions and extended warranty support for which the expected amortization period is greater than one year. As of December 31, 2025 and 2024, the unamortized balance of deferred commissions was $20.7 million and $17.9 million, respectively. For the years ended December 31, 2025, 2024 and 2023, the amount of amortization was $11.2 million, $8.9 million and $6.5 million, respectively. There was no impairment loss in relation to the costs capitalized for these respective periods.
Concentration of Customer Risk
No customer accounted for more than 10% of our revenue for the years ended December 31, 2025, 2024 and 2023.
One customer represented 12% of our accounts receivable as of December 31, 2025. Another customer represented 23% of our accounts receivable as of December 31, 2024.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.