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Revenue and Geographic Area | 9 Months Ended
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Sep. 30, 2024
Revenue from Contract with Customer [Abstract] |
Revenue and Geographic Area | 3. Rev enue and Geographic Area Disaggregation of Revenue by Product Type and Geographic Area The following tables present the Company's revenue for the three and nine months ended September 30, 2024 and 2023, respectively, based on product type and the geographic location of customers’ facilities (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Product revenue: |  |  |  |  |  |  |  |  |  |  |  |
Instruments |  | $ | 5,586 |  |  | $ | 9,002 |  |  | $ | 19,959 |  |  | $ | 26,512 |
Consumables |  |  | 14,007 |  |  |  | 9,709 |  |  |  | 45,389 |  |  |  | 31,302 |
Total product revenue |  |  | 19,593 |  |  |  | 18,711 |  |  |  | 65,348 |  |  |  | 57,814 |
Service revenue: |  |  |  |  |  |  |  |  |  |  |  |
Lab services |  |  | 18,247 |  |  |  | 114 |  |  |  | 40,780 |  |  |  | 564 |
Field services |  |  | 6,191 |  |  |  | 6,452 |  |  |  | 18,738 |  |  |  | 18,704 |
Total service revenue |  |  | 24,438 |  |  |  | 6,566 |  |  |  | 59,518 |  |  |  | 19,268 |
Product and service revenue |  |  | 44,031 |  |  |  | 25,277 |  |  |  | 124,866 |  |  |  | 77,082 |
Collaboration and other revenue |  |  | 938 |  |  |  | 90 |  |  |  | 2,848 |  |  |  | 1,070 |
Total revenue |  | $ | 44,969 |  |  | $ | 25,367 |  |  | $ | 127,714 |  |  | $ | 78,152 |
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Americas |  | $ | 23,751 |  |  | $ | 10,865 |  |  | $ | 68,241 |  |  | $ | 32,975 |
Europe, Middle East and Africa (EMEA) |  |  | 16,057 |  |  |  | 8,162 |  |  |  | 39,108 |  |  |  | 27,435 |
Asia-Pacific |  |  | 5,161 |  |  |  | 6,340 |  |  |  | 20,365 |  |  |  | 17,742 |
Total revenue |  | $ | 44,969 |  |  | $ | 25,367 |  |  | $ | 127,714 |  |  | $ | 78,152 |
Illumina Cambridge, Ltd. In connection with the Merger, the Company assumed a multi-year arrangement with Illumina Cambridge, Ltd. ("Illumina"), originally entered into by SomaLogic and Illumina in December 2021 (the "Illumina Agreement"), to jointly develop and commercialize co-branded kits that will combine Illumina's Next Generation Sequencing ("NGS") technology with SomaScan® technology (the "Co-Branded Kits"). Pursuant to the Illumina Agreement, SomaLogic received a non-refundable upfront payment of $30.0 million in January 2022. Subsequent to executing the Illumina Agreement, Illumina paid an additional $0.5 million to purchase the equipment, supplies and training necessary to run the SomaScan® assay at their facilities, representing a modification to the Illumina Agreement. As of the Closing Date, the Company determined that the transaction price of the Illumina Agreement was $30.5 million. Subsequent to commercialization of the Co-Branded Kits, the Company is entitled to receive $124.5 million of minimum guaranteed royalties through the term of the Illumina Agreement. No royalties were included in the Illumina transaction price as probability of commercialization had not been achieved as of the Closing Date. Subsequent to commercialization of the Co-Branded Kits, Illumina has the right to purchase SOMAmer reagents below SSP through the remaining term of the Illumina Agreement, which will continue for approximately 8 years following commercialization. Illumina's option to purchase SOMAmer reagents below SSP for this period represents a significant material right (the "Material Right"). As of the Closing Date, the Company allocated $30.4 million of the Illumina transaction price to the Material Right, which will be recognized as revenue as Illumina purchases SOMAmer reagents post commercialization. During the first quarter of 2024, the Company determined that commercialization of the Co-Branded Kits is probable due to the launch of an early-access program, and adjusted the transaction price to include $127.9 million of royalties expected to be received from 2025 through 2032. The Company allocated $0.4 million of the adjusted transaction price to satisfy performance obligations, and recognized that amount as revenue on a cumulative catch-up basis. The total transaction price of the Illumina Agreement as adjusted is $158.4 million. Substantially all of the transaction price is allocated to the Material Right, which the Company expects to recognize as revenue over an 8-year period from 2025 through 2032. NEC Corporation Additionally, in connection with the Merger, the Company assumed a joint development and commercialization agreement (the "JDCA") with NEC Solution Innovators, Ltd. ("NEC"), originally entered into by SomaLogic and NEC in March 2020, to develop and commercialize SomaScan® services in Japan. The JDCA is within the scope of ASC 808 as both companies are active participants and are exposed to significant rewards and risks dependent on commercial failure or success, and is accounted for by analogy to ASC 606. In connection with the Merger, the Company assumed certain contract liabilities and recorded $1.8 million of deferred revenue as of the Closing Date. Under the JDCA, the Company was entitled to receive $2.0 million in exchange for research and development services, which was received in April 2024. As of September 30, 2024, deferred revenue related to the JDCA was $1.5 million, which is expected to be fully recognized by March 31, 2025. New England Biolabs, Inc. Also in connection with the Merger, the Company assumed a non-exclusive licensing agreement with New England Biolabs, Inc. ("NEB"), originally entered into by SomaLogic and NEB in September 2022 (the "License Agreement"), whereby the Company provides a license to use certain proprietary information and know-how relating to SomaLogic's aptamer technology. Under the License Agreement, the Company is guaranteed fixed minimum royalties of $8.7 million to be received through September 2025. No revenue related to the guaranteed fixed minimum royalties will be recognized, as all revenue related to the receivable was recognized by SomaLogic prior to the Merger. Any revenue above the guaranteed fixed minimum royalties will be recognized in the period in which the subsequent sale or usage has occurred. As of September 30, 2024, royalties receivable related to this agreement were $8.2 million, including a current and non-current portion of $4.8 million and $3.4 million, respectively. Unfulfilled Performance Obligations A summary of the change in deferred revenue is as follows (in thousands):
|  | NEC |  |  | Illumina |  |  | Other |  |  | Total |
Deferred revenue at December 31, 2023 |  | $ | - |  |  | $ | - |  |  | $ | 15,127 |  |  | $ | 15,127 |
Deferred revenue assumed in connection with merger |  |  | 1,773 |  |  |  | 30,418 |  |  |  | 1,998 |  |  |  | 34,189 |
Recognition of revenue from beginning or assumed deferred revenue balances |  |  | (1,247 | ) |  |  | (406 | ) |  |  | (10,899 | ) |  |  | (12,552 | )
Revenue deferred during the period, net of revenue recognized |  |  | 1,000 |  |  |  | — |  |  |  | 8,354 |  |  |  | 9,354 |
Deferred revenue at September 30, 2024 |  | $ | 1,526 |  |  | $ | 30,012 |  |  | $ | 14,580 |  |  | $ | 46,118 |
The Company expects to recognize revenue from unfulfilled performance obligations associated with service contracts that were partially completed as of September 30, 2024 in the following periods (in thousands):
Fiscal Year |  | Expected Revenue (1) |
2024 remainder of the year |  | $ | 4,321 |
2025 |  |  | 9,002 |
2026 |  |  | 3,678 |
Thereafter |  |  | 1,790 |
Total |  | $ | 18,791 |
(1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in the Company’s condensed consolidated financial statements and are subject to change if the Company’s customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins. The Company also has unsatisfied performance obligations for service contracts with an expected term of one year or less not included in the amounts above.

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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 -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
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