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Revenue
 12 Months Ended
Dec. 31, 2024
Revenue from Contract with Customer [Abstract]  
Revenue
(5) Revenue

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account as defined in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

Remaining performance obligations represent the transaction price allocated to performance obligations which are unsatisfied as of the end of the period. The Company has excluded performance obligations with an original expected duration of one year or less. Remaining performance obligations as of December 31, 2024 were $5.6 million, of which we expect to recognize approximately 93% as revenue within the next two years, and the remaining balance thereafter.

Revenue Recognition

Revenue is recognized when control of the promised products or services is transferred to customers. Revenue is recognized in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and, accordingly, are accounted for as separate performance obligations. For such arrangements, we allocate revenue to each performance obligation based upon its relative stand-alone selling price (“SSP”). Revenue is recognized net of allowances for returns and any taxes collected from customers that are subsequently remitted to governmental authorities. The amount of consideration received and revenue recognized may vary based on changes in marketing incentive programs offered to our customers. Our marketing incentive programs take many forms, including volume discounts, trade-in allowances, rebates and other discounts. Refer to "Variable Consideration" section below for further discussion around the significant judgments in these areas.

A majority of our revenue is recognized at the point in time when products are shipped to or services are performed for customers. However, we also enter into service contracts and collaboration agreements with customers, for which we typically are required to recognize revenue over time.
Hardware and Materials

Revenue from hardware and material sales is recognized when control has transferred to the customer, which generally occurs when the goods have been shipped or delivered to the customer, risk of loss has transferred to the customer, and we have a present right to payment. In limited circumstances, when printer or other hardware sales include substantive customer acceptance provisions, revenue is recognized either when customer acceptance has been obtained, customer acceptance provisions have lapsed, or we have objective evidence that the criteria specified in the customer acceptance provisions have been satisfied.

Printers and certain other products include an assurance warranty for periods up to one year to ensure the product works as expected. These assurance warranties are not a separate performance obligation. For these initial product warranties, estimated costs are accrued at the time of the sale of the product. These cost estimates are established using historical information regarding the nature, frequency and average cost of claims for each type of printer or other product, as well as assumptions about future activity and events. Revisions to expense accruals are made as necessary based on changes in these historical and future factors.

Software

We also market and sell software tools that enable our customers to capture and customize content using our printers, design optimization and simulation software, and reverse engineering and inspection software. Our software does not require significant modification or customization, and the license provides the customer with a right to use the software as it exists when made available. Revenue from these software licenses is recognized either upon delivery of the product or of a key code which allows the customer to download the software. Customers may purchase post-sale support. Generally, the first year of support is included, but subsequent years are optional. Post-sale support, including the first year of support and the optional, subsequent years, are considered a separate obligation from the software and revenue is deferred at the time of sale and subsequently recognized ratably over future periods.

Services

We offer training, installation and non-contract maintenance services for our products. Additionally, we offer maintenance contracts customers can purchase at their option. For maintenance contracts, revenue is deferred at the time of sale based on the stand-alone selling prices of these services. Deferred revenue is recognized ratably over the term of the maintenance period on a straight-line basis and costs are expensed as incurred. Revenue from training, installation and non-contract maintenance services is recognized at the time of performance of the service.

We also sell software as a service, whereby the customer has the right to access the software. Revenue is recognized ratably over the related subscription period, as our performance obligation to provide access to the software is progressively fulfilled over the stated term of the contract.

Healthcare Solutions service sales are included within services revenue, and revenue is recognized upon shipment or delivery of the parts or performance of the service, based on the terms of the arrangement.

Collaboration and Licensing Agreements

We enter into collaboration and licensing arrangements with third parties. The nature of the activities to be performed and the consideration exchanged under these arrangements varies on a contract-by-contract basis. We evaluate these arrangements to determine whether they meet the definition of a customer relationship for which revenue should be recorded and recognized. These contracts may contain multiple performance obligations and may contain fees for licensing, research and development services, contingent milestone payments upon the achievement of contractual developmental criteria and/or royalty fees based on the licensees’ product revenue. We determine the revenue to be recognized under these arrangements based upon an evaluation of the distinct performance obligations; the identification and evaluation of material rights; the estimation of the amount of variable consideration to be included in transaction price, as well as the timing for inclusion of such variable consideration; and the amount of transaction price assigned to and the pattern of transfer of control for each distinct performance obligation. This typically results in the recognition of revenue over time using a cost-to-cost percentage of completion model to measure the progress of the transfer of control.
We review and update our estimate of variable consideration on a regular basis. Any adjustments to estimated revenue is recognized under the cumulative catch-up method. During the year ended December 31, 2024, the Company recorded a cumulative catch-up adjustment which reduced revenue by $8.7 million. The decrease in estimated recognizable variable consideration was due to the Company's determination that incremental revenue attributable to milestone payments that are contingent upon the achievement of contractual developmental criteria are no longer probable of being earned. As a result, the Company recognized an adjustment to reverse services revenue in the amount of $8.7 million for the year ended December 31, 2024 from collaboration arrangements.

The Company recognized $17.0 million in collaboration arrangement revenue during the year ended December 31, 2023. Our revenue recognized under collaboration and licensing agreements for the year ended December 31, 2023 includes the effect of the Company increasing its estimate of the variable consideration included in the transaction price related to one of its licensing agreements. The increase in estimated recognizable variable consideration was due to (1) the execution of a modification to the related customer contract and (2) the Company's determination that incremental revenue attributable to milestone payments that are contingent upon the achievement of contractual developmental criteria would be earned under the modified contract. As a result, during the year ended December 31, 2023, the Company recognized a cumulative catch-up adjustment to record incremental services revenue of $4.5 million, which reduced our reported basic and diluted loss per share by $0.03 for the year ended December 31, 2023.

The Company recognized $13.5 million in collaboration arrangement revenue during the year ended December 31, 2022.

The Company recognized $7.1 million, $14.1 million, and $11.1 million in products cost of sales related to the collaboration arrangements with customers for the years ended December 31, 2024, 2023, and 2022, respectively. All of our collaboration arrangement revenue and related costs of sales relates to R&D being performed under a single regenerative medicine contract.

All of our collaboration arrangement revenue and related costs of sales relates to R&D being performed under a single regenerative medicine contract.

Terms of Sale

Shipping and handling activities are treated as fulfillment costs rather than as an additional promised service. We accrue the costs of shipping and handling when the related revenue is recognized. Our incurred costs associated with shipping and handling are included in product cost of sales.

Creditworthiness is determined, and credit is extended, based upon an evaluation of each customer’s financial condition. New customers are generally required to complete a credit application and provide references and bank information to facilitate an analysis of creditworthiness.

Our terms of sale generally provide payment terms that are customary in the countries where we transact business. To reduce credit risk in connection with certain sales, we may, depending upon the circumstances, require significant deposits or payment in full prior to shipment. For maintenance services, we either bill customers on a time-and-materials basis or sell maintenance contracts that provide for payment in advance on either an annual or other periodic basis.

Significant Judgments

Allocation of Transaction Price

Our contracts with customers often include promises to transfer multiple products and services to a customer. For such arrangements, we allocate revenue to each performance obligation based on its relative SSP.

Judgment is required to determine the SSP for each distinct performance obligation in a contract. We estimate SSP using historical transaction data of observable prices. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In other instances where SSP is not directly observable, such as when the product or service is not sold separately, we determine the SSP using information that may include market conditions, expected cost plus margin, and other observable inputs.

In some circumstances, we have more than one SSP for individual products and services due to the stratification of those products and services by customers, geographic region or other factors. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP.
The determination of SSP is an ongoing process, and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.

Variable Consideration

We must assess if and when it is appropriate to include variable consideration when determining transaction price. This assessment, which impacts the timing and the amount of revenue recognized under contracts accounted for in accordance with ASC 606, requires management to conclude that it is probable that a significant reversal of the amount of cumulative revenue recognized with respect to a contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

As discussed above, our collaboration and licensing agreements include our most significant variable consideration and require judgement in the estimation of the amount of variable consideration to be included in the transaction price, as well as the timing for inclusion of such variable consideration. In addition, the nature of our sales and marketing incentives may lead to consideration that is variable in the form of discounts based on volumes purchased, trade in allowances, rebates or other discounts. We estimate variable consideration based on the expected value approach, which requires judgement in the identification of possible outcomes and in assessing the probability of those outcomes, or the most likely amount approach, which requires judgement to identify the most likely amount in a range of amounts. After estimating the amount of variable consideration, the Company includes the estimated variable consideration in transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company assesses both the likelihood of a future reversal of revenue and how significant the reversal is relative to the total consideration. Our estimates are based on historical experience, contract terms and other factors. Ongoing assessments are performed to determine if updates are needed to the original estimates.

Contracts Recognized Over Time

The Company recognizes the revenue attributable to certain contracts over time using a cost-to-cost percentage of completion model to measure progress of the transfer of control to the customer as services are performed, for which management believes the use of costs incurred reliably depicts the measurement of progress achieved by the Company in satisfying the performance obligation because it best depicts the transfer of control to the customer as we incur costs on our contracts. The application of this accounting requires the Company to estimate total costs that will be required to satisfy the related performance obligations. These estimates could change over the term of a contract.

Contract Balances

The timing of revenue recognition, billings and cash collections results in the recognition of billed accounts receivable and contract assets (including unbilled receivables) and customer deposits and deferred revenue (contract liabilities) on our consolidated balance sheets. Timing of revenue recognition may differ from the timing of invoicing to customers. We record accounts receivable when we have an unconditional right to recognize revenue at the time of invoicing, and unbilled receivables when revenue is recognized prior to invoicing. For most of our contracts, customers are invoiced when products are shipped or when services are performed resulting in billed accounts receivables for the remainder of the owed contract price. Unbilled receivables generally result from circumstances in which items have been shipped, revenue has been recognized, but the customer has not been charged. We also recognize a contract asset upon the recognition of revenue related to certain performance milestones that are deemed probable of achievement, but for which billing has not occurred and receipt of payment is conditioned upon factors other than the passage of time. Some contracts require the customer to remit a large payment at or near contract inception as a deposit prior to production, which is recorded as a customer deposit liability, however, revenue is not recorded until the performance obligation is satisfied. We also typically bill in advance for installation, training and maintenance contracts, as well as for extended warranties, resulting in deferred revenue.

The decrease in the contract assets balance as of December 31, 2024 (see table below) primarily relates to the decrease in the estimated variable consideration included in the transaction price related to one of the Company's collaboration and licensing agreements which has resulted in the reversal of incremental revenue for the year ending December 31, 2024 (refer to the discussion above of Collaboration and Licensing Agreements for further details) Changes in contract asset and liability balances were not materially impacted by any other factors for the years ended December 31, 2024 and 2023, respectively.
Accounts receivable, contract asset and contract liability balances as of December 31, 2024 and 2023 were as follows:
December 31,
(in thousands)20242023
Accounts receivable, net of reserves$101,471 $101,497 
Contract assets(1)
333 12,147 
Contract liabilities(2)
34,269 40,075 
(1) Includes $5.4 million reported in other assets as of December 31, 2023, respectively, that is related to a long-term contract and is billable upon attainment of milestones.
(2) Includes both current and long-term portions of deferred revenue. The long-term portion of deferred revenue is reported in other liabilities on the consolidated balance sheets.

During the year ended December 31, 2024, we recognized revenue of $32.0 million related to our contract liabilities at December 31, 2023. During the year ended December 31, 2023, we recognized revenue of $26.0 million related to our contract liabilities at December 31, 2022.

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within selling, general and administrative expenses. Additionally, the Company has excluded performance obligations with an original expected duration of one year or less from our disclosure of remaining performance obligations.

Revenue Concentrations

For the years ended December 31, 2024, 2023, and 2022, one customer accounted for approximately 16%, 15%, and 23% of our consolidated revenue, respectively, which revenue relates to our Healthcare Solutions segment. We expect to maintain our relationship with this customer.

Revenue by geographic region for the years ended December 31, 2024, 2023, and 2022, which is determined based upon the geographic region in which a sale originates, was as follows:
Year Ended December 31,
(in thousands)202420232022
Americas$253,468 $282,742 $308,516 
EMEA149,734 164,673 167,114 
APAC36,919 40,654 62,401 
Total$440,121 $488,069 $538,031 
United States (included in Americas above)$248,346 $278,268 $304,503 
Germany (included in EMEA above)
$69,101 $76,995 $80,108