Registration of securities issued in business combination transactions

Revenue and Contracts with Customers

v3.23.3
Revenue and Contracts with Customers
6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]    
Revenue and Contracts with Customers

Note 3 — Revenue and Contracts with Customers

Disaggregation of Revenue

We derive the majority of our revenue from subscription fees paid for access to and usage of our SaaS solutions for a specified period of time, typically one to three years. In addition to subscription fees, contracts with customers may include implementation fees for launch assistance and training. Fixed subscription and implementation fees are billed in advance of the subscription term and are due in accordance with contract terms, which generally provide for payment within 30 days. Our contractual arrangements include performance, termination and cancellation provisions, but do not provide for refunds. Customers do not have the contractual right to take possession of our software at any time. The following tables summarizes our revenue disaggregation by customer type and geographic region for the following periods:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2023

 

2022

 

2023

 

2022

Government

 

$

635,822

 

$

829,292

 

$

1,315,391

 

$

1,997,622

Non-government

 

 

1,652,046

 

 

2,660,384

 

 

3,575,166

 

 

5,737,134

   

$

2,287,868

 

$

3,489,676

 

$

4,890,557

 

$

7,734,756

 

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2023

 

2022

 

2023

 

2022

United States

 

$

1,732,353

 

$

2,643,470

 

$

3,710,432

 

$

5,972,106

Canada

 

 

555,515

 

 

846,206

 

 

1,180,125

 

 

1,762,650

   

$

2,287,868

 

$

3,489,676

 

$

4,890,557

 

$

7,734,756

Contracts with Multiple Performance Obligations

Customers may elect to purchase a subscription to multiple modules, multiple modules with multiple service levels, or, for certain of the Company’s solutions. We evaluate such contracts to determine whether the services to be provided are distinct and accordingly should be accounted for as separate performance obligations. If we determine that a contract has multiple performance obligations, the transaction price, which is the total price of the contract, is allocated to each performance obligation based on a relative standalone selling price method. We estimate standalone selling price based on observable prices in past transactions for which the product offering subject to the performance obligation has been sold separately. As the performance obligations are satisfied, revenue is recognized as discussed above in the product descriptions.

Transaction Price Allocated to Future Performance Obligation

GAAP provides certain practical expedients that limit the required disclosure of the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. As many of the contracts the Company has entered into with customers are for a twelve-month subscription term, a significant portion of performance obligations that have not yet been satisfied as of June 30, 2023 are part of a contract that has an original expected duration of one year or less. For contracts with an original expected duration of greater than one year, for which the practical expedient does not apply, the aggregate transaction price allocated to the unsatisfied performance obligations was $2.8 million as of June 30, 2023, of which $2.7 million is expected to be recognized as revenue over the next twelve months.

Deferred Revenue

Deferred revenue represents the unearned portion of subscription and implementation fees. Deferred revenue is recorded when cash payments are received in advance of performance. Deferred amounts are generally recognized within one to three years. Deferred revenue is included in the accompanying consolidated balance sheets under current liabilities, net of any long-term portion that is included in noncurrent liabilities. The following table summarizes deferred revenue activity for the six months ended June 30, 2023:

 

As of
December 31,
2022

 

Net additions

 

Revenue recognized

 

As of
June 30,
2023

Deferred revenue

 

$

730,573

 

4,422,081

 

(4,839,554

)

 

$

313,100

Of the $4.8 million of revenue recognized in the six months ended June 30, 2023, $0.5 million was included in deferred revenue at December 31, 2022.

Costs to Obtain Contracts

We capitalize sales commissions that are directly related to obtaining customer contracts and that would not have been incurred if the contract had not been obtained. These costs are included in the accompanying consolidated balance sheets and are classified as a component of Prepaid expenses and other current assets. Deferred contract

costs are amortized to sales and marketing expense over the expected period of benefit, which we have determined to be one to three years based on the estimated customer relationship period. The following table summarizes deferred contract cost activity for the six months ended June 30, 2023:

 

As of
December 31,
2022

 

Additions

 

Amortized costs

 

As of
June 30,
2023

Deferred contract costs

 

$

36,465

 

 

(34,756

)

 

$

1,709

Note 5 — Revenue and Contracts with Customers

Disaggregation of Revenue

We derive the majority of our revenue from subscription fees paid for access to and usage of our SaaS solutions for a specified period of time, typically one to three years. In addition to subscription fees, contracts with customers may include implementation fees for launch assistance and training. Fixed subscription and implementation fees are billed in advance of the subscription term and are due in accordance with contract terms, which generally provide for payment within 30 days. Our contracts typically have a one to three year term. Our contractual arrangements include performance, termination and cancellation provisions, but do not provide for refunds. Customers do not have the contractual right to take possession of the Company’s software at any time.

The following tables summarize revenue disaggregation by product for the following periods:

 

Year Ended December 31,

   

2022

 

2021

Government

 

$

2,945,946

 

$

3,258,158

Non-government

 

 

10,699,084

 

 

14,368,939

   

$

13,645,030

 

$

17,627,097

 

Year Ended December 31,

   

2022

 

2021

United States

 

$

10,458,169

 

$

13,408,624

Canada

 

 

3,186,861

 

 

4,218,473

   

$

13,645,030

 

$

17,627,097

Accounts Receivable from Customers

Our accounts receivable from customers were $674,626 and $873,688 as of December 31, 2022 and 2021 including $219,912, or 33 percent and $24,066, or three percent, respectively, attributable to two government clients.

The allowance for doubtful accounts consists of the following activity:

 

Year Ended December 31,

   

2022

 

2021

Allowance for doubtful accounts, balance at beginning of period

 

$

315,985

 

 

$

153,485

 

Bad debt expense

 

 

539,801

 

 

 

550,521

 

Write-off uncollectable accounts

 

 

(502,307

)

 

 

(388,021

)

Allowance for doubtful accounts, balance at end of period

 

$

353,479

 

 

$

315,985

 

Contracts with Multiple Performance Obligations

Customers may elect to purchase a subscription to multiple modules, multiple modules with multiple service levels, or, for certain of our solutions. We evaluate such contracts to determine whether the services to be provided are distinct and accordingly should be accounted for as separate performance obligations. If we determine that a contract has multiple performance obligations, the transaction price, which is the total price of the contract, is allocated to each performance obligation based on a relative standalone selling price method. We estimate standalone selling price based on observable prices in past transactions for which the product offering subject to the performance obligation has been sold separately. As the performance obligations are satisfied, revenue is recognized as discussed above in the product descriptions.

Transaction Price Allocated to Future Performance Obligations

As many of the contracts we have entered into with customers are for a twelve-month subscription term, a significant portion of performance obligations that have not yet been satisfied as of December 31, 2022 are part of a contract that has an original expected duration of one year or less. For contracts with an original expected duration of greater than one year, for which the practical expedient does not apply, the aggregate transaction price allocated to the unsatisfied performance obligations was $3.8 million as of December 31, 2022, of which $3.4 million is expected to be recognized as revenue over the next twelve months.

Deferred Revenue

Deferred revenue represents the unearned portion of subscription and implementation fees. Deferred revenue is recorded when cash payments are received in advance of performance. Deferred amounts are generally recognized within one year. Deferred revenue is included in the accompanying consolidated balance sheets under Total current liabilities, net of any long-term portion that is included in noncurrent liabilities. The following table summarizes deferred revenue activity for the year ended December 31, 2022:

 

As of
January 1,
2022

 

Net
additions

 

Revenue
recognized

 

As of
December 31,
2022

Deferred revenue

 

$

1,117,703

 

5,446,403

 

5,833,533

 

$

730,573

Of the $13.6 million of revenue recognized during the year ended December 31, 2022, $1.1 million was included in deferred revenue as of December 31, 2021.

Costs to Obtain Contracts

We capitalize sales commissions that are directly related to obtaining customer contracts and that would not have been incurred if the contract had not been obtained. These costs are included in the accompanying consolidated balance sheets and are classified as a component of Prepaid expenses and other current assets. Deferred contract costs are amortized to Sales and marketing expense over the expected period of benefit, which we have determined to be one year based on the estimated customer relationship period. The following table summarizes deferred contract cost activity for the year ended December 31, 2022:

 

As of
January 1,
2022

 

Additions

 

Amortized
costs
(1)

 

As of
December 31,
2022

Deferred contract costs

 

$

142,930

 

124,690

 

231,155

 

$

36,465

(1)      Includes contract costs amortized to Sales and marketing expense during the period.