5.ACCOUNTS RECEIVABLE, NET AND CONTRACT BALANCES

The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset.

Accounts Receivable, Net

The opening and closing balances of accounts receivable, net is as follows:

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The Company recognizes an accounts receivable allowance based on estimates of expected credit losses. The following table represents a roll-forward of the Company’s allowance for expected credit losses:

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Contract Balances

The opening and closing balances of contract assets (unbilled receivables) are as follows:

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The difference between the opening and closing balances of the Company’s contract assets (unbilled receivables) primarily results from timing differences between the Company’s performance and the customer’s payment as well as the number of active installation projects.

The opening and closing balances of contract liabilities (deferred revenue) were as follows:

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The difference between the opening and closing balances of the Company’s contract liabilities (deferred revenue) primarily related to a shift from multi-year contracts billed upfront to contracts billed on an annual basis, resulting in less deferred revenue being added upon invoice date. The ending contract liabilities balance represents advance consideration, net of discount, to be recognized as revenue over time, with the associated financing component recognized as interest expense.

The Company recognized $3.6 million and $8.3 million of prior year deferred software revenue during the three and six months ended June 30, 2026, respectively and $3.9 million and $8.4 million of prior year deferred software revenue during the three and six months ended June 30, 2025, respectively.

The contract liabilities (deferred revenue) consisted of the following amounts that will be recorded as revenue, net of the discount:

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Remaining performance obligations represent contracted revenue that has not yet been recognized, including amounts invoiced and recorded as deferred revenue and amounts under contract but not yet invoiced. As of June 30, 2026, the aggregate transaction price allocated to remaining performance obligations was approximately $45.7 million, of which $27.9 million was invoiced and recorded as deferred revenue and the remaining $17.8 million represents contracted amounts that had not yet been invoiced. The Company expects to recognize approximately 32.4% of the remaining performance obligations as revenue during the next 12 months and substantially all of the remainder of the deferred revenue over the following nine years, as the related subscription and service terms are satisfied.

The Company applies the practical expedients in ASC 606-10-50-14 and does not disclose amounts allocated to remaining performance obligations for (i) contracts with an original expected duration of one year or less and (ii) performance obligations for which the Company recognizes revenue in the amount to which it has the right to invoice. In addition, in accordance with ASC 606-10-50-14A, the Company excludes variable consideration allocated to wholly unsatisfied performance obligations.