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Revenue, Deferred Revenue And Prepaid Commissions | 9 Months Ended
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Sep. 30, 2022
Revenue from Contract with Customer [Abstract] |
Revenue, Deferred Revenue and Prepaid Commissions | REVENUE, DEFERRED REVENUE AND PREPAID COMMISSIONS Wireless Revenue Wireless revenue consists of two primary components: paging revenue and product and other revenue. Paging revenue consists primarily of recurring fees associated with the provision of messaging services and fees for paging devices and is net of a provision for service credits. Product and other revenue reflects system sales, the sale of devices and charges for paging devices that are not returned and are net of anticipated credits. Our core offering includes subscriptions to one-way or two-way messaging services for a periodic (monthly, quarterly, semiannual, or annual) service fee. This is generally based upon the type of service provided, the geographic area covered, the number of devices provided to the customer and the period of commitment. A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs. Two-way messaging is generally offered on a nationwide basis. (See Item 1. “Business,” in the 2021 Annual Report for more details.) Software Revenue Software revenue consists of two primary components: operations revenue and maintenance revenue. Operations revenue consists primarily of license revenues for our healthcare communications solutions, revenue from the sale of equipment that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is for ongoing support of our software solutions or related equipment and access to when-and-if available software updates. Maintenance is generally purchased and renewed on an annual basis. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Our software licenses and hardware are generally recognized at a point in time when we have transferred control to the customer. For software licenses, revenue is not recognized until the related license(s) has been made available to the customer and the customer can begin to benefit from its right to use the license(s). Our software licenses represent a right to use Spok’s intellectual property ("IP") as it exists at a point in time at which the license is granted. Many of our software licenses have significant standalone functionality due to their ability to process a transaction or perform a function or task, and we do not need to maintain those products, once provided to the customer, for value to exist. While the functionality of the IP that we license may substantively change during the license period, customers are not contractually or practically required to update their license as a result of those changes. Our wireless, professional services, and maintenance are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless or maintenance services. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project. Revenues are recognized proportionally as hours are incurred. The following table presents our revenues disaggregated by revenue type:
| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(Dollars in thousands) | 2022 |  | 2021 |  | 2022 |  | 2021
Revenue: |  |  |  |  |  |  |
Paging revenue | $ | 18,419 |  |  | $ | 18,844 |  |  | $ | 54,873 |  |  | $ | 57,332 |
Product and other revenue | 635 |  |  | 800 |  |  | 1,728 |  |  | 2,291 |
Wireless revenue | $ | 19,054 |  |  | $ | 19,644 |  |  | $ | 56,601 |  |  | $ | 59,623 |
License | $ | 2,147 |  |  | $ | 1,807 |  |  | $ | 5,933 |  |  | $ | 4,267 |
Professional services | 2,835 |  |  | 4,159 |  |  | 9,502 |  |  | 13,378 |
Hardware | 530 |  |  | 596 |  |  | 1,626 |  |  | 1,694 |
Operations revenue | 5,512 |  |  | 6,562 |  |  | 17,061 |  |  | 19,339 |
Maintenance | 9,178 |  |  | 9,645 |  |  | 27,617 |  |  | 28,648 |
Software revenue | $ | 14,690 |  |  | $ | 16,207 |  |  | $ | 44,678 |  |  | $ | 47,987 |
Total revenue | $ | 33,744 |  |  | $ | 35,851 |  |  | $ | 101,279 |  |  | $ | 107,610 |
The U.S. was the only country that accounted for more than 10% of the Company’s total revenue for the three and nine months ended September 30, 2022, and 2021. Revenue generated in the U.S. and internationally consisted of the following for the periods stated:
| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(Dollars in thousands) | 2022 |  | 2021 |  | 2022 |  | 2021
United States | $ | 32,827 |  |  | $ | 34,758 |  |  | $ | 98,152 |  |  | $ | 104,730 |
International | 917 |  |  | 1,093 |  |  | 3,127 |  |  | 2,880 |
Total revenue | $ | 33,744 |  |  | $ | 35,851 |  |  | $ | 101,279 |  |  | $ | 107,610 |
Deferred Revenues Our deferred revenues represent payments made by, or due from, customers in advance of our performance. Changes in the balance of total deferred revenue during the nine months ended September 30, 2022, are as follows:
(Dollars in thousands) | December 31, 2021 |  | Additions |  | Revenue Recognized |  | September 30, 2022
Deferred Revenue | $ | 26,406 |  |  | $ | 44,099 |  |  | $ | (44,035) |  |  | $ | 26,470 |
During the nine months ended September 30, 2022, the Company recognized $20.8 million related to amounts deferred as of December 31, 2021. Prepaid Commissions Our prepaid commissions represent payments made to employees in advance of our performance on the related underlying contracts. These costs have been incurred directly in relation to obtaining a contract. As such, these costs are amortized over the estimated period of benefit. Changes in the balance of total prepaid commissions during the nine months ended September 30, 2022 are as follows:
(Dollars in thousands) | December 31, 2021 |  | Additions |  | Commissions Recognized |  | September 30, 2022
Prepaid Commissions | $ | 1,821 |  |  | $ | 2,966 |  |  | $ | (3,016) |  |  | $ | 1,771 |
Prepaid commissions are included within prepaid expenses in the Condensed Consolidated Balance Sheets and commissions expense is included within selling and marketing in the Condensed Consolidated Statements of Operations. Remaining Performance Obligations The balance of remaining performance obligations at September 30, 2022, was $44.0 million. We expect to recognize approximately $32.4 million of our remaining performance obligations over the next 12 months, with the remaining balance recognized thereafter.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI https://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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