Phunware Inc (PHUN)

[Phunware]

"Our current strategy actually dates back several years when we exited over $24 million of low-margin application transaction business and focused on backfilling that with higher margin platform subscription and services deals, as well as data enriched application transaction campaigns. To that end, we finished 2018 with approximately $25 million of backlog, which represented a complete replacement of the prior low-margin application transaction business, even though we require one to five years for forward revenue recognition against these contract wins and terms."

"Our business is geared toward driving platform subscription bookings while building our deferred revenue and backlog. We license our MaaS platform to customers under one to five-year contracts, consistent with a Software-as-a-Service (SaaS) business model, in which we typically invoice annually, prepaid in advance. If a customer engages us to enhance an application with our SDKs, Application Programming Interfaces (APIs) or custom services, we provide software licensing, application development services and support and maintenance subscriptions which are then invoiced in advance and added to deferred revenue. Revenue is then
recognized in accordance with ASC 606, once the company has satisfied its performance obligations. The timing of revenue recognition is determined by the period over which these obligations are met, either on a one-time basis or ratably over time, often representing 12 to 60 months for one to five-year contract terms."