Revenue Recognition
Disaggregation of Revenue
The following table presents revenues disaggregated by revenue type and the timing of revenue recognition (in thousands):
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| | | | | | Years ended December 31, |
| Recognition | | | | | | 2025 | | 2024 | | 2023 |
| Subscription revenue | Over time | | | | | | $ | 558,408 | | | $ | 457,975 | | | $ | 401,013 | |
| Volume-based revenue | Over time | | | | | | 534,755 | | | 479,913 | | | 386,276 | |
| Implementation services and other revenue | Various | | | | | | 6,115 | | | 5,661 | | | 3,721 | |
| Total revenues | | | | | | | $ | 1,099,278 | | | $ | 943,549 | | | $ | 791,010 | |
Contract Liabilities
We derive our revenue from contracts with clients primarily through subscription fees and volume-based fees. Our payment terms with the client generally comprise an initial payment for implementation services, which includes client enrollment and the setup of contracted solutions on our platform. These implementation fees are due upon contract execution. Additionally, subscription fees are earned on an ongoing basis, which are invoiced monthly.
Client payments received in advance of fulfilling the corresponding performance obligations are recorded as contract liabilities. Implementation fees are recognized over the customer life, with any unrecognized amounts deferred as contract liabilities. These amounts are reported as deferred revenue on our consolidated balance sheet.
The following table presents activity impacting deferred revenue balances (in thousands):
| | | | | | | | | | | | | | | | | |
| Years ended December 31, |
| 2025 | | 2024 | | 2023 |
| Beginning balance | $ | 16,266 | | | $ | 17,108 | | | $ | 16,454 | |
| Revenue recognized (a) | (21,330) | | | (10,917) | | | (9,900) | |
| Additional amounts deferred | 16,672 | | | 10,075 | | | 10,554 | |
| Deferred revenue assumed as part of acquisitions (see Note 7) | 61,743 | | | — | | | — | |
| Ending balance | $ | 73,351 | | | $ | 16,266 | | | $ | 17,108 | |
(a) For the year ended December 31, 2025, $10.8 million of revenue was recognized from the acquired Iodine deferred revenue (see Note 7).
Transaction Price Allocated to Remaining Performance Obligations
As of December 31, 2025, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the next 12 months and greater than 12 months was $78.6 million and $37.8 million, respectively. Included in the aforementioned amounts to be recognized is the impact from the Iodine acquisition (see Note 7), which was $26.4 million to be recognized for the next 12 months and $23.5 million to be recognized in greater than 12 months.
The transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) for executed contracts does not include revenue related to performance obligations that are part of a contract with an original expected duration of one year or less. Additionally, the balance does not include variable consideration that is allocated entirely to wholly unsatisfied promises that form part of a single performance obligation comprised of a series of distinct daily services.
Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations and changes in the timing and scope of contracts, arising from contract modifications.
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.