Product, subscription and support revenue

The Company sells a collective defense software solution that is comprised of two product offerings, IronDefense and IronDome. Through December 2022, the software platform was delivered through both on-premises licenses bundled with on-premises hardware and through subscription software. The Company stopped offering on-premises deployment options in December 2022. During fiscal year 2023, the Company launched IronRadar, a new product intended to broaden the Company's market reach to companies of all sizes that is delivered via subscription software.

The security appliance deliverables include proprietary operating system software and hardware together with regular threat intelligence updates and support, maintenance, and warranty. The Company combines intelligence dependent hardware and software licenses with the related threat intelligence and support and maintenance as a single performance obligation, as it delivers the essential functionality of the cybersecurity solution. The Company recognizes revenue for this single performance obligation ratably over the expected term. Judgement is required for the assessment of material rights relating to renewal options associated with the Company's contracts.

Revenue from subscriptions, which allow customers to use the Company's security software over a contracted period without taking possession of the software, and managed services, where the Company provides managed detection and response services for customers, is recognized over the contractual term. The cloud-based subscription revenue, where the Company also provides hosting, recognized for the fiscal years ended January 31, 2023 and 2022 were $21,457 and $15,960, respectively. Overall product, subscription, and support revenue recognized for the years ended January 31, 2023 and 2022 were $25,703 and $25,347, respectively.

Professional services revenue

The Company sells professional services, including cyber operations monitoring, security, training and tailored maturity assessments. Revenue derived from these services is recognized as the services are delivered. Revenue recognized from professional services for the fiscal years ended January 31, 2023 and 2022 was $1,554 and $2,197, respectively.

Customer concentration

For the fiscal year ended January 31, 2023, eight customers accounted for 61%, or $16,536, with two of those customers accounting for 22% of the Company's revenue, and for the fiscal year ended January 31, 2022, six customers accounted for 51%, or $13,975, with two of those customers accounting for 21%, of the Company’s revenue. As of January 31, 2023, and January 31, 2022, two customers represented 56% and 49% of the total accounts receivable balance, respectively.

Significant customers are those which represent at least 10% of the Company’s total revenue for a fiscal year. The following table presents customers that represent 10% or more of the Company’s total revenue:

Deferred costs

The Company defers contract fulfillment costs that includes appliance hardware. The balances in deferred costs are as follows:

Capitalized costs are included in deferred costs on the consolidated balance sheet. of which $2,222 is current and $2,140 is long-term as of January 31, 2023. The balance of deferred commissions at January 31, 2023 and 2022 were $1,751 and $1,238, respectively. Deferred commissions are included in deferred costs on the consolidated balance sheet, of which $916 is current and $835 is long-term as of January 31, 2023.

Deferred revenue

Deferred revenue represents amounts received from and/or billed to customers in excess of revenue recognized. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue depending on whether the revenue recognition criteria have been met. During the fiscal years ended January 31, 2023 and January 31, 2022, the Company recognized revenue of $14,405 and $12,509, respectively, which was included in the deferred revenue balance at the beginning of each of the respective periods.

Remaining performance obligations

As of January 31, 2023, the remaining performance obligations totaled $42,982. The Company’s recognition of revenue in the future thereon will be in: