Revenue
The Company's revenue is derived principally from software licensing, customization and related maintenance and services, which are generally accounted for as separate performance obligations with differing revenue recognition patterns. Arrangements with both software licenses and customization services are accounted for as a combined performance obligation. The transaction price is allocated to each distinct performance obligation based on the relative standalone selling price.
Revenue from software licenses is classified as software license revenue. Software license revenue is recognized upfront upon delivery of the licensed software. Revenue associated with the license of the Company’s SIP is classified as software license revenue and recognized as revenue (i) upfront upon delivery of the standard SIP license, or (ii) over time when customization services are combined with the SIP license, as specific contractual milestones are met and incremental functionality is delivered to the customer.
Maintenance and service revenue, which consists of both PCS for software licenses and support services for SIP licenses, is recognized ratably over the term of the contract period. Professional services revenue, which is classified as maintenance and service revenue, is recognized based on when the Company delivers the related service pursuant to the terms of the arrangement.
Customer contracts
The Company accounts for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights and payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration it is entitled to.
For multi-year software licenses, the Company generally invoices customers annually at the beginning of each annual coverage period.
The contract balances of the Company’s accounts receivable and contract assets, both of which are net of allowance for expected credit losses, and deferred revenue were as follows:
| | | | | | | | | | | | | | | | | |
| Contract Balances |
| December 31, 2025 | | December 31, 2024 | | January 1, 2024 |
| (in thousands) |
| Accounts receivable, net | $ | 9,710 | | | $ | 9,211 | | | $ | 4,006 | |
| Contract assets, net | $ | 27,634 | | | $ | 24,543 | | | $ | 14,999 | |
| Deferred revenue | $ | 15,908 | | | $ | 11,090 | | | $ | 12,953 | |
| | | | | |
Transaction Price Allocated to the Remaining Performance Obligations
As of December 31, 2025, approximately $47.1 million of revenue is expected to be recognized from remaining performance obligations. This figure represents contracted revenue that has not yet been recognized, which includes both deferred revenue and backlog, net of cancellations and adjustments. The Company's backlog represents installment billings for periods beyond the current billing cycle. The Company expects to recognize revenue on approximately 54% of these remaining performance obligations over the next 12 months, with the remaining balance recognized thereafter.
Deferred Revenue
Deferred revenue is comprised mainly of unearned revenue related to PCS on software licenses and pending software license and SIP license deliveries. Deferred revenue also includes contracts for professional services to be performed in the future.
During each of the years ended December 31, 2025 and 2024, the Company recognized revenue of $6.7 million, that was included in the deferred revenue balance at the beginning of fiscal year 2025 and 2024. All other activity in deferred revenue is due to the timing of invoices in relation to the timing of revenue recognized during the years ended December 31, 2025 and 2024 as described above. Approximately 68% of the Company's deferred revenue as of December 31, 2025 is expected to be recognized over the next 12 months with the remainder recognized thereafter.