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Revenue
 3 Months Ended
Dec. 31, 2024
Revenue  
Revenue

2.            Revenue

We derive revenue from the sale of integrated hardware and software, third-party service contracts, professional services, managed services, financing of hardware and software, and other services.

We recognize revenue from hardware upon transfer of control, which is at a point in time typically upon shipment when title transfers. Revenue from software is recognized at a point in time when the license is granted with the exception of the Company’s own software ARIA Advanced Threat Detection and Response (“ADR”), which is recognized evenly over time that includes the contract term.

Professional services generally include implementation, installation, and training services. Professional services are considered a series of distinct services that form one performance obligation and revenue is recognized over time as services are performed.

Revenue generated from managed services is recognized over the term of the contract. Certain managed services contracts include financing of hardware and software. Revenues from arrangements which include financing are allocated considering relative standalone selling prices of lease and non-lease components within the agreement. The lease component includes hardware, which is subject to ASC 842, Leases. The non-lease components are subject to ASC 606, Revenue from Contracts with Customers.

Other services generally include revenue generated through our royalty, extended warranty, multicomputer repair, and maintenance contracts. Royalty revenue is sales-based and recognized on the date of subsequent sale of the product, which occurs on the date of customer shipment. Revenue from extended warranty contracts is recognized ratably over the warranty period. Multicomputer repair services revenue is recognized upon control transfer when the customer takes possession of the computer at time of shipping. Revenue generated from maintenance services is recognized evenly over the term of the contract.

The right of return risk lies with the original manufacturer of the product. Managed service contracts contain the right to refund if canceled within 30 days of inception. Any products with a standard warranty are treated as a warranty obligation under ASC 460, Guarantees.

The following policies are applicable to our major categories of segment revenue transactions:

TS Segment Revenue

TS Segment revenue is derived from the sale of hardware, software, professional services, third-party service contracts, maintenance contracts, managed services, and financing of hardware and software.

Third-party service contracts are evaluated to determine whether such service revenue should be recorded as gross or net sales and whether over time or at point in time.

HPP Segment Revenue

HPP segment revenue is derived from the sale of ARIA product lines, integrated hardware and software, maintenance, and other services through the Myricom, and Multicomputer.

ARIA ADR revenue is derived from sale of software and hardware. There is one performance obligation in an ARIA ADR sale as the software and hardware are combined because they are inputs in the contract to deliver an output of threat protection. This combined performance obligation is recognized evenly over the contract term. The transaction price is fixed consideration.

ARIA Zero Trust Gateway (“AZT”) revenue contains two performance obligations: a perpetual software license and post-contract customer support (“PCS”). The transaction price is fixed consideration and allocated based on relative

stand-alone selling price. The software license has a large majority of transaction price allocated to it. Software license revenue is recognized at a point in time, generally when the license is made available to the customer. PCS revenue is recognized ratably over the contractual period of generally one year. The PCS can be renewed and is sold on a standalone basis after the initial contract term expires.

Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products’ functionality, and PCS. PCS is considered immaterial in the context of the contract and therefore is not a separate performance obligation. Multicomputer revenue is derived from the sale of hardware, software, extended warranties, royalties, and repair services. See disaggregated revenues below by products/services and divisions/segments.

See disaggregated revenues below by division.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Technology Solutions Segment

​

​

​

​

High

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performance

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Products

​

United

​

​

​

​

​

​

​

Consolidated

Three months ended December 31,

    

Segment

    

Kingdom

    

U.S.

    

Total

    

Total

​

​

(Amounts in thousands)

2024

​

​

​

​

​

​

​

​

​

​

Sales:

​

​

​

​

​

​

​

​

​

​

Product

​

$

82

​

$

133

​

$

10,798

​

$

10,931

​

$

11,013

Service

​

​

348

​

​

47

​

​

4,260

​

​

4,307

​

​

4,655

Finance *

​

​

—

​

​

—

​

​

2

​

​

2

​

​

2

Total sales

​

$

430

​

$

180

​

$

15,060

​

$

15,240

​

$

15,670

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Technology Solutions Segment

​

​

​

​

High

​

​

​

​

​

​

​

​

​

​

​

​

Performance

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Products

​

United

​

​

​

​

​

​

​

Consolidated

Three months ended December 31,

    

Segment

    

Kingdom

    

U.S.

    

Total

    

Total

​

​

(Amounts in thousands)

2023

​

​

​

​

​

​

​

​

​

​

Sales:

​

​

​

​

​

​

​

​

​

​

Product

​

$

472

​

$

312

​

$

10,622

​

$

10,934

​

$

11,406

Service

​

​

240

​

​

69

​

​

3,659

​

​

3,728

​

​

3,968

Finance *

​

​

—

​

​

—

​

​

1

​

​

1

​

​

1

Total sales

​

$

712

​

$

381

​

$

14,282

​

$

14,663

​

$

15,375

​

*     Finance revenue is related to equipment leasing and is not subject to the guidance on revenue from contracts with customers (ASC 606).

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​

​

​

​

​

See details of timing of revenue recognition, whether CSPi acted as the principal or agent, and geography below. Geographic areas are based on which the products were shipped or services rendered.

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

Technology Solutions Segment

​

​

​

​

​

High

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Performance

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Products

​

United

​

​

​

​

​

​

​

Consolidated

Three months ended December 31,

    

Segment

    

Kingdom

    

U.S.

    

Total

    

Total

​

​

(Amounts in thousands)

2024

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Timing of Revenue Recognition

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Transferred at a point in time where CSPi is principal

​

$

82

​

$

133

​

$

10,915

​

$

11,048

​

$

11,130

Transferred at a point in time where CSPi is agent

​

 

—

​

 

—

​

 

1,804

​

 

1,804

​

 

1,804

Transferred over time where CSPi is principal

​

​

348

​

​

47

​

​

2,341

​

​

2,388

​

​

2,736

Total Revenue

​

$

430

​

$

180

​

$

15,060

​

$

15,240

​

$

15,670

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Geography

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

United States

​

$

422

​

$

72

​

$

14,743

​

$

14,815

​

$

15,237

Americas (excluding United States)

​

​

3

​

​

—

​

​

244

​

​

244

​

​

247

Europe

​

​

—

​

​

108

​

​

73

​

​

181

​

​

181

Asia-Pacific

​

​

5

​

​

—

​

​

—

​

​

—

​

​

5

Total Revenue

​

$

430

​

$

180

​

$

15,060

​

$

15,240

​

$

15,670

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2023

​

 

  

​

 

  

​

 

  

​

 

  

​

 

  

Timing of Revenue Recognition

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Transferred at a point in time where CSPi is principal

​

$

503

​

$

312

​

$

10,775

​

$

11,087

​

$

11,590

Transferred at a point in time where CSPi is agent

​

 

—

​

 

4

​

 

1,195

​

 

1,199

​

 

1,199

Transferred over time where CSPi is principal

​

​

209

​

​

65

​

​

2,312

​

​

2,377

​

​

2,586

Total Revenue

​

$

712

​

$

381

​

$

14,282

​

$

14,663

​

$

15,375

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Geography

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

United States

​

$

693

​

$

—

​

$

13,250

​

$

13,250

​

$

13,943

Americas (excluding United States)

​

​

—

​

​

25

​

​

584

​

​

609

​

 

609

Europe

​

​

1

​

​

356

​

​

94

​

​

450

​

​

451

Asia-Pacific

​

​

18

​

​

—

​

​

354

​

​

354

​

​

372

Total Revenue

​

$

712

​

$

381

​

$

14,282

​

$

14,663

​

$

15,375

​

In the TS US division, financing of goods and services is offered to certain customers. This involves amounts due reflecting sales whose payment terms exceed one year. See Note 5 Financing Receivables, net for more details. Revenue from these agreements in the three months ended December 31, 2024 was $23 thousand and CSPi acted as the agent. Revenue from these agreements in the three months ended December 31, 2023 was $1.4 million, which nearly all of the revenue was with CSPi acting as the principal.

Contract Assets and Liabilities

When we have performed work but do not have an unconditional right to payment, a contract asset is recorded. When we have the right to bill a customer, accounts receivable is recorded as an unconditional right exists. Current contract assets were $0.7 million and $1.7 million as of December 31, 2024 and September 30, 2024, respectively. Current contract assets were $0.9 million as of September 30, 2023. The current portion is recorded in other current assets on the condensed consolidated balance sheets. There were no noncurrent contract assets as of December 31, 2024 and September 30, 2024. There were no noncurrent contract assets as of September 30, 2023. The difference in the balances is due to regular timing differences between when work is performed and having an unconditional right to payment.

Contract liabilities arise when payment is received before we transfer a good or service to the customer. Current contract liabilities were $2.6 million and $2.2 million as of December 31, 2024 and September 30, 2024, respectively. Current contract liabilities were $1.9 million as of September 30, 2023. The current portion of contract liabilities is recorded in deferred revenue on the condensed consolidated balance sheets. There were no long-term contract liabilities as of December 31, 2024 and September 30, 2024, respectively. There were no long-term contract liabilities as of September 30, 2023. Revenue recognized for the three months ended December 31, 2024 that was included in contract liabilities as of September 30, 2024 was $0.7 million. Revenue recognized for the three months ended December 31, 2023 that was included in contract liabilities as of September 30, 2023 was $0.9 million.

Contract Costs

Incremental costs of obtaining a contract involving customer transactions where the revenue and the related transfer of goods and services are equal to or less than a one year period, are expensed as incurred, utilizing the practical expedient in ASC 340-40-25-4. For a period greater than one year, incremental contract costs are capitalized if we expect to recover these costs. The costs are amortized over the contract term and expected renewal periods. The period of amortization is generally three to six years. Incremental costs are related to commissions in the TS portion of the business. Current capitalized contract costs are within the other current assets on the condensed consolidated balance sheets as of December 31, 2024 and September 30, 2024. The portion of current capitalized costs were $73 thousand and $177 thousand as of  December 31, 2024 and September 30, 2024, respectively. There are no noncurrent capitalized costs on the condensed consolidated balance sheets. The amount of incremental costs amortized for the three months ended December 31, 2024 and 2023 were $104 thousand and $108 thousand, respectively. This is recorded in Selling, general, and administrative expenses. There was no impairment related to incremental costs capitalized during the three months ended December 31, 2024 and 2023.

Other

Projects are typically billed upon completion or at certain milestones. Product and services are typically billed when shipped or as services are being performed. Payment terms are typically 30 days to pay in full except in Europe where it could be up to 90 days. Most of our contracts are for less than one year. There are certain contracts that contain a financing component. See Note 5 Financing receivables to the condensed consolidated financial statements for additional information. We elected to use the optional exemption to not disclose the aggregate amount of the transaction price allocated to performance obligations that have an original expected duration of one year or less. This is due to a low number of performance obligations, which are less than one year from being unsatisfied at each period end. Most of these contracts are related to product sales.

We have certain contracts that have an original term of more than one year. The royalty agreement is longer than one year but not included in the table below as the royalties are sales-based. Managed service contracts are generally longer than one year. For these contracts the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2024 is set forth in the table below:

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​

​

​

Fiscal Year

    

(Amounts in thousands)

2025 (remaining 9 months)

​

$

959

2026

​

​

999

2027

​

​

892

2028

​

​

888

2029

​

​

222

​

​

$

3,960

​