|9 Months Ended|
Sep. 30, 2021
|Revenue From Contract With Customer [Abstract]|
The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for credits and any taxes collected from customers. Taxes collected are subsequently remitted to governmental authorities.
The Company determines revenue recognition through the following steps:
• Identification of the contract, or contracts, with a customer;
• Identification of the performance obligations in the contract;
• Determination of the transaction price;
• Allocation of the transaction price to the performance obligations in the contract; and
• Recognition of revenue when, or as, the Company satisfies a performance obligation.
Nature of Products and Services
The Company's revenue is primarily derived from usage-based fees earned from the sale of communications services offered through software solutions mainly to large enterprises and medium-sized customers.
The Company’s revenue is recognized upon the sending of a message, the execution of a voice call, the execution of a video call, the usage of microservices available in-platform, or by the authentication of a financial transaction of an end user of the
Company’s customer using the Company’s platform in an amount that reflects the consideration the Company expects to receive in exchange for those services which is generally based upon agreed fixed prices per unit.
Platform access is considered a monthly service comprised of one performance obligation and usage-based fees are recognized as revenue in the period in which the usage occurs. After usage occurs, there are no remaining obligations that would preclude revenue recognition. Revenue from usage-based fees represented 92% and 95% of total revenue for the three and nine months ended September 30, 2021, respectively (98% and 98% of total revenue for the three and nine months ended September 30, 2020, respectively).
Subscription-based fees are derived from certain term-based contracts, such as with the sale of short codes, usage of Whatsapp®, and customer support, which are generally at least one year long. Term-based contract revenue is recognized on a ratable basis over the contractual term of the arrangement beginning on the date that the service is made available to the customer. Revenue from term-based fees represented 8% and 5% of total revenue for the three and nine months ended September 30, 2021, respectively (2% and 2% of total revenue for the three and nine months ended September 30, 2020, respectively).
The Company's arrangements do not contain general rights of return. The contracts do not provide customers with the right to take possession of the software supporting the applications. Amounts that have been invoiced are recorded in trade receivables and in revenue or deferred revenue depending on whether the revenue recognition criteria have been met.
The Company receives payments from customers based on a billing schedule as established in its contracts. Contract assets are recorded when the Company has a conditional right to consideration for its completed performance under the contracts. Trade receivables are recorded when the right to this consideration becomes unconditional, which is as usage occurs. The Company did not have any contract assets as of September 30, 2021 and December 31, 2020.
Deferred revenue is recorded when cash payments are received in advance of future usage on non-cancellable contracts. As of September 30, 2021 and December 31, 2020, the Company recorded $11.1 million and $3.7 million, respectively, as deferred revenue in its condensed consolidated balance sheets. In the three and nine months ended September 30, 2021, the Company recognized $595,000 and $2.8 million, respectively, of revenue in its condensed consolidated statements of operations that was included in deferred revenue as of December 31, 2020.
In general, revenue disaggregated by geography is aligned according to the nature and economic characteristics of the Company’s business and provides meaningful disaggregation of the Company’s results of operations. See Note 14 – Geographic Information for details of revenue by geographic area.
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.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef