Revenue Recognition
Disaggregated Revenue
Disaggregated revenue from contracts with customers by major source and customer class was as follows:
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| | | Years Ended
December 31, |
| (in thousands) | | | | 2025 | 2024 |
| Regulated revenue | | | | | |
| Water Service | | | | | |
| Residential | | | | $ | 19,948 | | $ | 18,612 | |
| Irrigation | | | | 4,084 | | 3,332 | |
| Commercial | | | | 1,945 | | 1,551 | |
| Multi-family | | | | 439 | | 320 | |
| Construction | | | | 1,156 | | 1,140 | |
| Other water revenue | | | | 1,037 | | 1,109 | |
| Total water revenue | | | | 28,609 | | 26,064 | |
| Wastewater and recycled water service | | | | | |
| Residential | | | | 23,803 | | 23,404 | |
| Commercial | | | | 1,186 | | 1,195 | |
| Multi-family | | | | 300 | | 174 | |
| Recycled water revenue | | | | 1,501 | | 1,500 | |
| Other wastewater revenue | | | | 359 | | 355 | |
| Total wastewater and recycled water revenue | | | | 27,149 | | 26,628 | |
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| Total revenue | | | | $ | 55,758 | | $ | 52,692 | |
Contract Balances
The Company’s contract assets and liabilities consisted of the following:
| | | | | | | | |
| (in thousands) | December 31, 2025 | December 31, 2024 |
| Contract assets | | |
| Accounts receivable, net | $ | 3,746 | | $ | 3,233 | |
| Total contract assets | $ | 3,746 | | $ | 3,233 | |
| Contract liabilities | | |
| Deferred revenue - ICFA | $ | 22,772 | | $ | 21,517 | |
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| Total contract liabilities | $ | 22,772 | | $ | 21,517 | |
Accounts Receivable and Allowance for Credit Losses
Accounts receivable consisted of the following:
| | | | | | | | |
| (in thousands) | December 31, 2025 | December 31, 2024 |
| Billed receivables | $ | 3,990 | | $ | 3,396 | |
| Less: provision for credit losses | (244) | | (163) | |
| Accounts receivable, net | $ | 3,746 | | $ | 3,233 | |
The following table summarizes the allowance for credit loss activity:
| | | | | | | | |
| (in thousands) | December 31, 2025 | December 31, 2024 |
| Beginning of period | $ | (163) | | $ | (122) | |
| Credit loss expense | (193) | | (103) | |
| Write offs | 123 | | 90 | |
| Recoveries | (11) | | (28) | |
| End of period | $ | (244) | | $ | (163) | |
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Deferred revenue from ICFAs is recognized as revenue once the obligations specified within the applicable ICFA are met, including construction of sufficient operating capacity to serve the customers for which revenue was deferred. Due to the uncertainty of future events, the Company is unable to estimate when to expect recognition of deferred revenue from ICFAs.
The following table summarizes the ICFA deferred revenue activity:
| | | | | | | | |
| (in thousands) | December 31, 2025 | December 31, 2024 |
| Beginning of period | $ | 21,517 | | $ | 19,656 | |
| Payments allocated to deferred revenue | 1,255 | | 1,861 | |
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| End of period | $ | 22,772 | | $ | 21,517 | |
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.