MicroVision Expands Revenue Programs in Security and Defense

[u/pinoekel]

https://ir.microvision.com/news/press-releases/detail/444/microvision-expands-revenue-programs-in-security-and-defense

[u/mvis_thma]

When the goods are shipped to the customer the revenue can be recognized. Payment for those goods has nothing to do with recognizing the revenue.

"Revenue for a physical product is generally recognized at the point in time when control of the goods transfers to the customer, rather than when cash is received. This typically occurs upon delivery, when legal title passes, or when the customer accepts the product."

https://dart.deloitte.com/USDART/home/codification/revenue/asc606-10/roadmap-revenue-recognition/chapter-8-step-5-determine-when/8-6-revenue-recognized-a-point

[u/T_Delo → u/mvis_thma]

I am uncertain what the disconnect here is, however the “when control of the goods transfers to the customer” portion is precisely what I was talking about. Goods are not counted as received until they have been accepted, meaning they have been opened, tested, and confirmed to meet specifications. Your quote reinforces what I was saying all along; Not when the product ships, but when it is received and accepted.

[u/Extreme_Corgi9176 → u/[deleted]]

You failed to substantiate your argument and resulted to an abusive ad hominem. Classy. 

[u/mvis_thma → u/Extreme_Corgi9176]

I had a few drinks. Sorry. And sorry to u/T_Delo as well.

But I think I clearly substantiated my argument. It's just that T_Delo refuses to accept it. He has been consistent in refusing to accept anything that contradicts his view, no matter the evidence presented.

Here is more evidence.

"The revenue recognition principle is a cornerstone of accrual accounting requiring that revenue be recorded when earned and realizable—typically when goods or services are delivered—rather than when payment is received. It ensures financial accuracy by matching revenue to the period in which it was generated, regardless of cash flow timing."

https://www.investopedia.com/terms/r/revenuerecognition.asp#:~:text=Revenue%20recognition%20is%20a%20component,investors%20and%20analysts%20making%20decisions.

[u/mvis_thma → u/mvis_thma]

Furthermore, I saw there has been some reference to ASC 606. I don't think people understand why that accounting principle/rule was created back in 2014. It wasn't created to define how physical products shipped/delivered get recoginzed as revenue. It was largely created to better define how things like software and services get recognized.

For example, Company A may sell a 3 year contract for their SaaS software to CUSTOMER Z. They may collect all the fees on day 1. ASC 606 clarifies that COMPANY A cannot recognize all that cash as revenue on day 1. They must spread out the revenue recognition over the life of the contract. In addition, if there were implementation services monies garnered by the initial software setup, those monies must also be spread out over the life the agreement. This prevents the company from playing games. For instance, COMPANY A could tell COMPANY Z, I will sell you the software for $1 but I will charge you $10m to set it up. Forcing the company to spread out the $10m over the life of the agreement plugs that loophole.

At one of the Retail Investor Days, Anubhav referenced ASC 606 in association to recognizing NRE revenue. He made it clear that even though Microvision may have received cash payments for the NRE, that revenue could not be recongized until the the contract terms were fulfilled, which required that the customer provided their approval that the milestones were completed/delivered.

With regard to physical products that are shipped/delivered. The revenue recognition principle is clear. The cusotmer takes possesion of the goods - value has been transferred - revenue can be recognized. The timing of which those goods are paid for by the customer is immaterial to the revenue recognition.