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Revenue
 6 Months Ended
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 total 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