related to the sale of systems typically contain separate obligations for the delivery of system(s), installation and an implied
obligation to provide software enhancements if and when available for one year following installation. Revenue is recognized when
the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer
acknowledgment of delivery or installation, depending on the terms of the arrangement. Revenue from the implied obligation to
deliver software enhancements if and when available is recognized ratably over the first year following installation of the system
as the customer receives the right to software updates throughout the period and is included in Other Recurring Revenue. The Company’s
system contracts generally do not provide a right of return. Systems are generally covered by a one-year warranty; warranty costs
were not material for the periods presented.
from sales of disposable products is recognized when control is transferred to the customers, which generally occurs at the time
of shipment, but can also occur at the time of delivery depending on the customer arrangement. Disposable products are covered
by a warranty that provides for the return of defective products. Warranty costs were not material for the periods presented.
Company is entitled to royalty payments from Biosense Webster, payable quarterly based on net revenues from sales of the co-developed
recurring revenue includes revenue from software licenses, product maintenance plans, and other post warranty maintenance. Revenue
from services and license fees is deferred and amortized over the service or license fee period, which is typically one year.
Revenue related to services performed on a time-and-materials
basis is recognized when performed.
Company invoices its customers based on the billing schedules in its sales arrangements. Contract assets primarily represent the
difference between the revenue that was recognized based on the relative selling price of the related performance obligations
and the contractual billing terms in the arrangements. Deferred revenue is primarily related to service contracts, for which the
service fees are billed up-front, generally quarterly or annually, and for amounts billed in advance for system contracts for
which some performance obligations remain outstanding. For service contracts, the associated deferred revenue is generally recognized
ratably over the service period. For system contracts, the associated deferred revenue is recognized when the remaining performance
obligations are satisfied. See Note 2 for additional detail on Deferred Revenue. The Company did not have any impairment losses
on its contract assets for the periods presented.
Recognized from the Costs to Obtain a Contract with a Customer
Company has determined that sales incentive programs for the Company’s sales team meet the requirements to be capitalized
as the Company expects to generate future economic benefits from the related revenue generating contracts after the initial capital
sales transaction. The costs capitalized as contract acquisition costs included in prepaid expenses and other assets in the Company’s
balance sheets were $0.4 million as of June 30, 2018. The Company did not incur any impairment losses during any of the periods
of systems revenue include direct product costs, installation labor and other costs, estimated warranty costs, and initial training
and product maintenance costs. These costs are recorded at the time of sale. Costs of disposable revenue include direct product
costs and estimated warranty costs and are recorded at the time of sale. Cost of revenue from services and license fees are recorded
of the Three Months Ended June 30, 2018 and 2017
Revenue decreased from $8.5 million for the three months ended June 30, 2017 to $7.6 million for the three months ended June 30,
2018, a decrease of 11%. Revenue from the sale of systems decreased from $1.8 million to $0.3 million, a decrease of approximately
83%, primarily due to decreased sales volume. We recognized a total of $0.3 million revenue
for Odyssey and Cinema systems during the 2018 period. System revenue for the prior period included one Niobe
system and a total of $0.8 million for Odyssey systems. Revenue from sales of disposable interventional devices, service,
and accessories increased to $7.2 million for the three months ended June 30, 2018 from $6.6 million for the three months ended
June 30, 2017, an increase of approximately 9% due to increased service revenue from time-and-material billings.
of Revenue. Cost of revenue decreased from $2.2 million for the three months ended June 30, 2017 to $1.4 million for the three
months ended June 30, 2018, a decrease of approximately 37%. As a percentage of our total
revenue, overall gross margin increased to 82% for the three months ended June 30, 2018 from 74% for the three months ended June
30, 2017. Cost of revenue for systems sold decreased from $0.9 million for the three
months ended June 30, 2017 to $0.5 million for the three months ended June 30, 2018. Gross margin for systems decreased
to ($0.1) million for the three months ended June 30, 2018 from $0.9 million for the three months ended June 30, 2017 due to low
production and sales volumes. Cost of revenue for disposables, service, and accessories decreased to $0.9 million for the three
months ended June 30, 2018 from $1.3 million for the three months ended June 30, 2017 due to decreased costs under service contracts.
Gross margin for disposables, service, and accessories was 87% for the current quarter compared
to 81% for the three months ended June 30, 2017.