REVENUE |
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| REVENUE | 4.REVENUE Disaggregation of Revenue The following table provides information about disaggregated revenue from customers into the nature of the products and services provided and the related timing of revenue recognition:
The Company records a reserve as a component of cost of hardware revenue based on historical costs of replacement units for returns of defective products. For the three and six months ended June 30, 2026, the reserve recorded for hardware warranties was approximately 2% and 2%, respectively, of cost of hardware revenue. For the three and six months ended June 30, 2025, the reserve recorded for hardware warranties was approximately 3% and 3%, respectively, of cost of hardware revenue. The Company also provides certain customers a right of return for non-defective product, which is treated as a reduction of hardware revenue based on the Company’s expectations and historical experience. For the three and six months ended June 30, 2026, the allowance for returns resulted in a reduction of revenue by $0.2 million and $0.1 million, respectively. For the three and six months ended June 30, 2025, the allowance for returns resulted in a reduction of revenue by $0.1 million and $0.1 million, respectively. The Company generates software revenue primarily through the license of its software-as-a-service (“SaaS”) cloud-based platform to customers on a subscription-based arrangement, as well as from the resale of third-party software in connection with HelloTech services. Subscription fees vary depending on the features selected by customers as well as the term. SaaS arrangements generally have term lengths of , , or ten years and include a fixed fee generally paid in advance, annually or monthly. When significant discounts are provided to customers on the longer-term software contracts paid in advance, the Company has determined that there is a significant financing component related to the time value of money and therefore has recorded the discount as interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. The interest expense related to the significant financing component is recorded using the effective interest method, which has higher interest expense at inception and declines over time to match the underlying economics of the transaction. The amount of interest expense related to this component was $0.4 million and $0.9 million for the three and six months ended June 30, 2026, respectively, and $0.6 million and $1.4 million for the three and six months ended June 30, 2025, respectively. Deferred Contract Costs The following table represents a roll-forward of the Company’s deferred contract costs:
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