Company: DMRC
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001437749-25-005471
Chunk: 24

Company: Digimarc CORP
Filing Date: 2025-02-27
Form: 10-K
Item: Item 7A
Chunk 24
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 applying the following steps:  
   Step 1: Identify the contract(s) with a customer.  
   Step 2: Identify the performance obligation(s) in the contract.  
   Step 3: Determine the transaction price.  
   Step 4: Allocate the transaction price to the performance obligation(s) in the contract.  
   Step 5: Recognize when (or as) the entity satisfies the performance obligation(s).
    
   The Company derives its revenue primarily from software subscriptions and software development services. Applicable revenue recognition criteria are considered separately for each performance obligation as follows:
    
    •Subscription revenue consists primarily of revenue earned from subscription fees for access to the Company’s SaaS platform and products and, to a lesser extent, licensing fees for software products. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically one to three years.

    •Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within one month after the services are provided.

        F-
       12

        DIGIMARC CORPORATION

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

        (In thousands, except per share data)

   Customer arrangements  may contain multiple deliverables such as software platform subscriptions, software product subscriptions, and professional services. Subscriptions and services offered are usually distinct performance obligations. When they are not capable of being distinct, they are combined with other subscriptions or services until a distinct performance obligation is identified. To determine the transaction price, management considers the terms of the contract and the Company’s customary business practices. Some contracts  may contain variable consideration. In those cases, management estimates the amount of variable consideration based on the sum of probability-weighted amounts in a range of possible consideration amounts. As part of this assessment, management evaluates whether any of the variable consideration is constrained and if it is, it is not included in the transaction price. The consideration is allocated between distinct performance obligations based on their stand-alone selling prices. When the standalone selling prices are not directly observable, management makes estimates based on reasonably available information, including market conditions, specific factors affecting the Company, and information about the customer. The Company recognizes the revenue associated with each performance obligation as the