Avid Bioservices Inc (CDMO)

[exwannabe]

If I can elaborate and explain somewhat...

If a customer pays you in advance, it is not revenue because you have not earned the money.

But you do have cash on the books, and thus need some account to offset that. And that is deferred revenue. It is a liability, and this makes sense. If I give you $100 to do something for me tomorrow, you owe me that "something". And that is what this measures.

Once the product is shipped, the liability will get erased and they will record revenue.

Additionally though, they also have customer deposits of many millions. This is basically the same, but reflects payments for work that has not even started.

So, you just need to realize that both those line items refer to cash that has been paid in advance by customers.

Cheynew, a question. Would it be reasonable to assume that the reason why they book some as deposits is that there is not yet a firm order that can not be cancelled?