Fusemachines Inc. Revenue Disclosure
Note 13. Revenue
Under ASC 606, revenue is recognized throughout the life of the executed agreement. The Company measures revenue based on consideration specified in a contract with a customer. Furthermore, the majority of the Company’s revenues are recognized over time as services are performed. The Company recognizes revenue when a performance obligation is satisfied by transferring control of the product or service to the customer
The Company provides services to customers worldwide, with the majority of revenues being derived from contracts with customers located within the United States. The table below presents the breakdown of the Company’s revenues, based on the customer’s location (in thousands).
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Customer locations | ||||||||
| United States | 7,342 | 8,544 | ||||||
| Rest of the world | 372 | 267 | ||||||
| Total revenue | 7,714 | 8,811 | ||||||
The table below presents the breakdown of the Company’s revenues, based on the customer’s service type (in thousands).
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Service type | ||||||||
| AI Solutions (Products and Services)* | 7,581 | 8,811 | ||||||
| AI Education Services | 133 | |||||||
| Total revenue | 7,714 | 8,811 | ||||||
| * | AI Solutions (Products and Services) includes both software product revenues and related services. Product revenue represents an insignificant portion of total revenue for the periods presented and, accordingly, has not been separately disclosed. |
Fusemachines Inc. and Subsidiaries Notes to the Consolidated Financial Statements
Service Type
During the year ended December 31, 2025 and 2024, the Company had one significant service type, AI Solutions (products and services). For the year ended December 31, 2025 and 2024, there were $7,581 thousand and $8,811 thousand of AI Solutions (products and services) revenue. The company had insignificant revenue from AI Solutions – Products for the year ended December 31, 2025, and 2024, respectively. The revenue recognized for AI education services were $133 thousand and during the year ended December 31, 2025, and 2024.
Deferred Revenue
During the year ended December 31, 2025, the Company recognized revenue of $53.7 thousand from the deferred revenue balance as of December 31, 2024. During the year ended December 31, 2024, the Company recognized revenue of $20.6 thousand from the deferred revenue balance as of December 31, 2023.
Contract Costs
The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representatives as a result of obtaining service contracts and contract renewals, are recoverable and therefore the Company’s consolidated balance sheets included capitalized balances in the amount of $18.9 thousand and $21.9 thousand as of December 31, 2025 and December 31, 2024 which represents the current portion and is included within prepaid expenses and other current assets, respectively and $3.2 thousand and $5 thousand, as of December 31, 2025 and December 31, 2024, respectively, which are included within other assets. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately two years and are included in selling and marketing in the accompanying consolidated statements of operations and comprehensive loss. Amortization recognized during the year ended December 31, 2025 and 2024 was $31.1 thousand and $36.2 thousand, respectively.
Transaction price allocated to remaining performance obligations
The Company elected to apply the practical expedient for the right to invoice and does not disclose performance obligations that have original expected durations of one year or less.
The opening and closing balances of contract assets, deferred revenue and unbilled revenue are as follows (in thousands):
| Contract Assets | Deferred revenue | Unbilled Revenue | ||||||||||
| Ending balance as of December 31, 2023 | $ | 22 | $ | 21 | $ | 80 | ||||||
| Increase/(decrease), net | 5 | 33 | 33 | |||||||||
| Ending balance as of December 31, 2024 | 27 | 54 | 113 | |||||||||
| Increase/(decrease), net | (5 | ) | (54 | ) | (97 | ) | ||||||
| Ending balance as of December 31, 2025 | $ | 22 | $ | 16 | ||||||||
Fusemachines Inc. and Subsidiaries Notes to the Consolidated Financial Statements
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.