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Revenue | 6 Months Ended
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Jun. 30, 2023
Revenue from Contract with Customer [Abstract] |
Revenue | NOTE 3 – REVENUE Revenue Recognition The Company derives the majority of its revenue from licensing its technology (”Technology License”) and solutions (”Technology Solutions”) to customers. For Technology License arrangements, the customer obtains rights to the technology delivered at the commencement of the agreement. For Technology Solutions arrangements, the customer receives access to a platform, media or data that includes frequent updates, where access to such updates is critical to the functionality of the technology. The timing of when performance obligations are satisfied, as well as the fee arrangements underlying each agreement, determine when revenue is recognized. The Company also generates revenue from non-recurring engineering (“NRE”) services, advertising, and hardware products, each of which was less than 10% of tot al revenue for all periods presented. Disaggregation of Revenue The following table summarizes revenue by market (in thousands):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Pay-TV |  | $ | 58,031 |  |  | $ | 60,371 |  |  | $ | 118,325 |  |  | $ | 124,525 |
Consumer Electronics |  |  | 31,716 |  |  |  | 39,493 |  |  |  | 68,451 |  |  |  | 67,583 |
Connected Car |  |  | 23,474 |  |  |  | 20,855 |  |  |  | 44,022 |  |  |  | 40,574 |
Media Platform |  |  | 13,651 |  |  |  | 5,484 |  |  |  | 22,913 |  |  |  | 12,410 |
Total revenue |  | $ | 126,872 |  |  | $ | 126,203 |  |  | $ | 253,711 |  |  | $ | 245,092 |
The following table summarizes revenue by geographic location (in thousands):
|  | Three Months Ended June 30, |
|  | 2023 |  |  | 2022 |
U.S. |  | $ | 69,133 |  |  |  | 54 | % |  | $ | 78,409 |  |  |  | 62 | %
Japan |  |  | 18,566 |  |  |  | 15 |  |  |  | 16,494 |  |  |  | 13 |
China |  |  | 10,527 |  |  |  | 8 |  |  |  | 4,163 |  |  |  | 3 |
Europe and Middle East |  |  | 8,416 |  |  |  | 7 |  |  |  | 7,048 |  |  |  | 6 |
Other |  |  | 20,230 |  |  |  | 16 |  |  |  | 20,089 |  |  |  | 16 |
Total revenue |  | $ | 126,872 |  |  |  | 100 | % |  | $ | 126,203 |  |  |  | 100 | %
|  | Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |
U.S. |  | $ | 134,292 |  |  |  | 53 | % |  | $ | 138,080 |  |  |  | 56 | %
Japan |  |  | 36,061 |  |  |  | 14 |  |  |  | 32,044 |  |  |  | 13 |
China |  |  | 22,037 |  |  |  | 9 |  |  |  | 14,455 |  |  |  | 6 |
Europe and Middle East |  |  | 18,582 |  |  |  | 7 |  |  |  | 18,736 |  |  |  | 8 |
Other |  |  | 42,739 |  |  |  | 17 |  |  |  | 41,777 |  |  |  | 17 |
Total revenue |  | $ | 253,711 |  |  |  | 100 | % |  | $ | 245,092 |  |  |  | 100 | %
A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia, Europe and the Middle East, and it is expected that this revenue will continue to account for a significant portion of total revenue in future periods. Contract Balances Contract Assets Contract assets primarily consist of unbilled contracts receivable that are expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed. The amount of unbilled contracts receivable may not exceed their net realizable value and is classified as noncurrent if the payments are expected to be received more than one year from the reporting date. Contract assets also include the incremental costs of obtaining a contract with a customer principally consisting of sales commissions and deferred engineering costs for non-recurring engineering. Contract assets were recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):
|  | June 30, 2023 |  |  | December 31, 2022 |
Unbilled contracts receivable, net |  | $ | 60,068 |  |  | $ | 65,251 |
Other current assets |  |  | 534 |  |  |  | 848 |
Unbilled contracts receivable, noncurrent |  |  | 16,840 |  |  |  | 4,289 |
Other noncurrent assets |  |  | 799 |  |  |  | 978 |
Total contract assets |  | $ | 78,241 |  |  | $ | 71,366 |
Contract Liabilities Contract liabilities are mainly comprised of deferred revenue related to technology solutions arrangements, multi-period licensing, and other offerings for which the Company is paid in advance while the promised good or service is transferred to the customer at a future date or over time. Deferred revenue also includes amounts received related to professional services to be performed in the future. Deferred revenue arises when cash payments are received, including amounts which are refundable, in advance of performance obligations being completed. As of June 30, 2023 and December 31, 2022, the current and noncurrent balances of deferred revenue were $42.7 million and $44.5 million, respectively. The following table presents additional revenue disclosures (in thousands):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Revenue recognized in the period from: |  |  |  |  |  |  |  |  |  |  |  |
Amounts included in deferred revenue at the beginning of the period |  | $ | 5,547 |  |  | $ | 6,269 |  |  | $ | 12,266 |  |  | $ | 14,601 |
Performance obligations satisfied in previous periods (true ups, licensee reporting adjustments and settlements) (1)(2) |  | $ | 597 |  |  | $ | 20,830 |  |  | $ | (1,285 | ) |  | $ | 20,866 |
(1) True ups represent the differences between the Company’s quarterly estimates of per-unit royalty revenue and actual production/sales-based royalties reported by licensees in the following period. Licensee reporting adjustments represent corrections or revisions to previously reported per-unit royalties by licensees, generally resulting from the Company’s inquiries or compliance audits. Settlements represent resolutions of litigation or disputes during the period for past royalties owed. (2) For the three and six months ended June 30, 2022, the Company recorded revenue from both the settlement of a contract dispute with a large mobile imaging customer, and the execution of a long-term license agreement with a leading consumer electronics and over-the-top service provider. The long-term license agreement was effective as of the expiration of the prior agreement, and the Company expected to record revenue from the license agreement in future periods. Remaining Performance Obligations Remaining revenue under contracts with performance obligations represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied under certain of the Company’s fixed fee arrangements and engineering services contracts. As of June 30, 2023, the Company’s remaining revenue under contracts with performance obligations was as follows (in thousands):
Year Ending December 31: |  | Amounts |
2023 (remaining 6 months) |  | $ | 32,688 |
2024 |  |  | 30,962 |
2025 |  |  | 17,592 |
2026 |  |  | 6,173 |
2027 |  |  | 1,633 |
Thereafter |  |  | 1,412 |
Total |  | $ | 90,460 |
Allowance for Credit Losses The allowance for credit losses, which includes the allowance for accounts receivable and unbilled contracts receivable, represents the Company’s best estimate of lifetime expected credit losses inherent in those financial assets. The Company’s lifetime expected credit losses are determined based on historical experience, relevant information about past events, current conditions, and reasonable and supportable forecasts that affect collectability. The Company monitors its credit exposure through ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary. In addition, the Company performs routine credit management activities such as timely account reconciliations, dispute resolution, and payment confirmations. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. The Company’s noncurrent unbilled contracts receivable is derived from fixed-fee or minimum-guarantee arrangements, primarily with large well-capitalized companies. It is generally considered to be of high credit quality due to past collection history and the nature of the customers. The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2023 and 2022 (in thousands):
|  | Three Months Ended June 30, |
|  | 2023 |  |  | 2022 |
|  | Accounts Receivable |  |  | Unbilled Contracts Receivable |  |  | Accounts Receivable |  |  | Unbilled Contracts Receivable |
Beginning balance |  | $ | 2,067 |  |  | $ | 350 |  |  | $ | 1,962 |  |  | $ | 369 |
Provision for credit losses |  |  | 186 |  |  |  | (25 | ) |  |  | 201 |  |  |  | (63 | )
Recoveries/charge-off |  |  | (41 | ) |  |  | — |  |  |  | (358 | ) |  |  | — |
Ending balance |  | $ | 2,212 |  |  | $ | 325 |  |  | $ | 1,805 |  |  | $ | 306 |
|  | Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |
|  | Accounts Receivable |  |  | Unbilled Contracts Receivable |  |  | Accounts Receivable |  |  | Unbilled Contracts Receivable |
Beginning balance |  | $ | 1,950 |  |  | $ | 369 |  |  | $ | 2,245 |  |  | $ | 480 |
Provision for credit losses |  |  | 322 |  |  |  | (44 | ) |  |  | 21 |  |  |  | (174 | )
Recoveries/charge-off |  |  | (60 | ) |  |  | — |  |  |  | (461 | ) |  |  | — |
Ending balance |  | $ | 2,212 |  |  | $ | 325 |  |  | $ | 1,805 |  |  | $ | 306 |

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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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