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Note 5 - Revenue Recognition
 9 Months Ended
Sep. 30, 2023
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

NOTE 5:

REVENUE RECOGNITION

 

Under ASC No. 606, “Revenue from Contracts with Customers” (“ASC 606”), an entity recognizes revenue when or as it satisfies a performance obligation by transferring intellectual property (“IP”) licenses or services to the customer, either at a point in time or over time. The Company recognizes most of its revenues at a point in time upon delivery when the customer accepts control of the IP. The Company recognizes revenue over time on significant license customization contracts that are in the scope of ASC 606 by using cost inputs to measure progress toward completion of its performance obligations.

 

Revenues that are derived from the sale of a licensee’s products that incorporate the Company’s IP are classified as royalty revenues. Royalty revenues are recognized during the quarter in which the sale of the product incorporating the Company’s IP occurs. Royalties are calculated either as a percentage of the revenues received by the Company’s licensees on sales of products incorporating the Company’s IP or on a per unit basis, as specified in the agreements with the licensees. When the Company does not receive actual sales data from the customer prior to the finalization of its financial statements, royalty revenues are recognized based on the Company’s estimation of the customer’s sales during the quarter.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS- CONTINUED (UNAUDITED)

 

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The estimated revenues do not include amounts of royalties or unexercised contract renewals:

 

  

Remainder

of 2023

  

2024

  

2025 and

thereafter

 

Licensing and related revenues

 $2,456  $4,609  $995 

 

Disaggregation of revenue:

 

The following table provides information about disaggregated revenue by primary geographical market, major product line and timing of revenue recognition:

 

  

Nine months ended September 30, 2023

(unaudited)

  

Three months ended September 30, 2023

(unaudited)

 
  

Licensing and

related

revenues

  

Royalties

  

Total

  

Licensing and

related

revenues

  

Royalties

  

Total

 

Primary geographical markets

                        

United States

 $1,399  $4,269  $5,668  $360  $1,208  $1,568 

Europe and Middle East

  8,378   2,140   10,518   4,796   828   5,624 

Asia Pacific

  35,442   21,109   56,551   8,765   8,097   16,862 

Other

  520   —   520   19   —   19 

Total

 $45,739  $27,518  $73,257  $13,940  $10,133  $24,073 
                         

Major product/service lines

                        

Connectivity products (baseband for handset and other devices, Bluetooth, Wi-Fi, NB-IoT and SATA/SAS)

 $40,762  $20,093  $60,855  $13,110  $7,648  $20,758 

Smart sensing products (AI, sensor fusion, audio/sound and imaging and vision)

  4,977   7,425   12,402   830   2,485   3,315 

Total

 $45,739  $27,518  $73,257  $13,940  $10,133  $24,073 
                         

Timing of revenue recognition

                        

Products transferred at a point in time

 $36,504  $27,518  $64,022  $11,479  $10,133  $21,612 

Products and services transferred over time

  9,235   —   9,235   2,461   —   2,461 

Total

 $45,739  $27,518  $73,257  $13,940  $10,133  $24,073 

 

  

Nine months ended September 30, 2022

(unaudited)

  

Three months ended September 30, 2022

(unaudited)

 
  

Licensing and

related

revenues

  

Royalties

  

Total

  

Licensing and

related

revenues

  

Royalties

  

Total

 

Primary geographical markets

                        

United States

 $6,390  $5,661  $12,051  $4,061  $1,561  $5,622 

Europe and Middle East

  4,160   2,227   6,387   1,721   887   2,608 

Asia Pacific

  45,221   26,574   71,795   12,876   8,944   21,820 

Total

 $55,771  $34,462  $90,233  $18,658  $11,392  $30,050 
                         

Major product/service lines

                        

Connectivity products (baseband for handset and other devices, Bluetooth, Wi-Fi, NB-IoT and SATA/SAS)

 $44,948  $25,582  $70,530  $12,443  $8,320  $20,763 

Smart sensing products (AI, sensor fusion, audio/sound and imaging and vision)

  10,823   8,880   19,703   6,215   3,072   9,287 

Total

 $55,771  $34,462  $90,233  $18,658  $11,392  $30,050 
                         

Timing of revenue recognition

                        

Products transferred at a point in time

 $45,771  $34,462  $80,233  $14,995  $11,392  $26,387 

Products and services transferred over time

  10,000   —   10,000   3,663   —   3,663 

Total

 $55,771  $34,462  $90,233  $18,658  $11,392  $30,050 

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS- CONTINUED (UNAUDITED)

 

Contract balances:

 

The following table provides information about trade receivables, unbilled receivables and contract liabilities from contracts with customers:

 

  

September 30,

2023

  

December 31,

2022

 
         

Trade receivables

 $7,997  $11,136 

Unbilled receivables (associated with licensing and related revenue)

  12,943   8,436 

Unbilled receivables (associated with royalties)

  10,123   10,258 

Deferred revenues (short-term contract liabilities)

  3,994   3,098 

 

The Company receives payments from customers based upon contractual payment schedules; trade receivables are recorded when the right to consideration becomes unconditional, and an invoice is issued to the customer. Unbilled receivables associated with licensing and other include amounts related to the Company’s contractual right to consideration for completed performance objectives not yet invoiced. Unbilled receivables associated with royalties are recorded as the Company recognizes revenues from royalties earned during the quarter, but not yet invoiced, either by actual sales data received from customers, or, when applicable, by the Company’s estimation. Contract liabilities (deferred revenue) include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract.

 

During the three and nine months ended September 30, 2023, the Company recognized $336 and $2,706, respectively, that was included in deferred revenues (short-term contract liability) balance at January 1, 2023. 

 

Discontinued operation:

 

The Company's revenues streams from Intrinsix chip design business comprises primarily of non-recurring engineering (“NRE”) revenues. Revenues that are derived from NRE chip design services are performance obligations that are recognized over time as the services are rendered. For time-and-materials contracts, the performance obligation is satisfied, and revenue is recognized over time as the services are performed. Generally, contracts call for billings on a time-and-materials basis; however, in instances when a fixed-fee contract is signed, revenue is recognized over time, based on an input method of labor costs expended, relative to total expected labor costs to complete the contract.

 

The Intrinsix business relies heavily on contracts with U.S. government prime contractors.