Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 01, 2023 | Jun. 30, 2022 | |
Document Information [Line Items] | |||
Entity Registrant Name | DZS INC | ||
Entity Central Index Key | 0001101680 | ||
Trading Symbol | DZSI | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 31,048,773 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 285,798,543 | ||
Entity File Number | 000-32743 | ||
Entity Tax Identification Number | 22-3509099 | ||
Entity Address, Address Line1 | 5700 Tennyson Parkway, Suite 400 | ||
Entity Address, City or Town | Plano | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 75024 | ||
City Area Code | 469 | ||
Local Phone Number | 327-1531 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Interactive Data Current | Yes | ||
Title of each class | Common Stock, $0.001 Par Value | ||
Name of each exchange on which registered | NASDAQ | ||
ICFR Auditor Attestation Flag | true | ||
Auditor Firm ID | 42 | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Location | Dallas, Texas | ||
Documents Incorporated by Reference | Portions of the registrant's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders are incorporated by reference into Part III where indicated | ||
Grant Thornton LLP | |||
Document Information [Line Items] | |||
Auditor Firm ID | 248 | ||
Auditor Name | GRANT THORNTON LLP | ||
Auditor Location | Dallas, Texas |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 34,347 | $ 46,666 |
Restricted cash | 3,969 | 6,808 |
Accounts receivable - trade, net of allowance for doubtful accounts of $16,184 as of December 31, 2022 and $17,735 as of December 31, 2021 | 153,780 | 86,114 |
Other receivables | 16,144 | 10,621 |
Inventories | 78,513 | 56,893 |
Contract assets | 576 | 2,184 |
Prepaid expenses and other current assets | 8,371 | 5,690 |
Total current assets | 295,700 | 214,976 |
Property, plant and equipment, net | 9,478 | 9,842 |
Right-of-use assets from operating leases | 12,606 | 12,640 |
Goodwill | 19,952 | 6,145 |
Intangible assets, net | 31,742 | 5,115 |
Other assets | 15,536 | 8,950 |
Total assets | 385,014 | 257,668 |
Current liabilities: | ||
Accounts payable - trade | 121,225 | 64,258 |
Short-term debt - bank, trade facilities and secured borrowings | 9,706 | |
Current portion of long-term debt | 24,073 | |
Contract liabilities | 21,777 | 6,091 |
Operating lease liabilities | 4,834 | 4,097 |
Accrued and other liabilities | 27,559 | 16,032 |
Total current liabilities | 209,174 | 90,478 |
Contract liabilities - non-current | 7,864 | 3,044 |
Operating lease liabilities - non-current | 11,417 | 12,103 |
Pension liabilities | 11,021 | 16,527 |
Other long-term liabilities | 2,806 | 3,609 |
Total liabilities | 242,282 | 125,761 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity: | ||
Common stock, 36,000 shares authorized, 30,968 and 27,505 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively, at $0.001 par value | 30 | 27 |
Additional paid-in capital | 271,884 | 223,336 |
Accumulated other comprehensive loss | (4,351) | (4,457) |
Accumulated deficit | (124,831) | (86,999) |
Total stockholders’ equity | 142,732 | 131,907 |
Total liabilities and stockholders’ equity | $ 385,014 | $ 257,668 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||||
Allowance for doubtful accounts | $ 16,184 | $ 17,735 | $ 3,954 | $ 393 |
Common stock, authorized (in shares) | 36,000,000 | 36,000,000 | ||
Common stock, issued (in shares) | 30,968,000 | 27,505,000 | ||
Common stock, outstanding (in shares) | 30,968,000 | 27,505,000 | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Net revenue | $ 375,691 | $ 350,206 | $ 300,640 |
Cost of revenue | 257,335 | 229,938 | 203,761 |
Gross profit | 118,356 | 120,268 | 96,879 |
Operating expenses: | |||
Research and product development | 56,124 | 47,052 | 37,957 |
Selling, marketing, general and administrative | 85,371 | 90,241 | 63,543 |
Restructuring and other charges | 4,617 | 12,310 | |
Impairment of long-lived assets | 827 | 1,735 | 6,472 |
Amortization of intangible assets | 3,570 | 1,182 | 1,432 |
Total operating expenses | 150,509 | 152,520 | 109,404 |
Operating loss | (32,153) | (32,252) | (12,525) |
Interest expense, net | (1,442) | (238) | (1,958) |
Loss on extinguishment of debt | (1,369) | ||
Other income (expense), net | (1,837) | 1,020 | (3,729) |
Loss before income taxes | (35,432) | (31,470) | (19,581) |
Income tax provision | 1,999 | 3,213 | 3,501 |
Net loss | (37,431) | (34,683) | (23,082) |
Foreign currency translation adjustments | (4,172) | (4,046) | 2,796 |
Actuarial gain (loss) | 4,278 | 1,713 | (981) |
Comprehensive loss | $ (37,325) | $ (37,016) | $ (21,267) |
Net loss per share | |||
Basic | $ (1.33) | $ (1.30) | $ (1.07) |
Diluted | $ (1.33) | $ (1.30) | $ (1.07) |
Weighted average shares outstanding, basic | 28,085 | 26,692 | 21,588 |
Weighted average shares outstanding, diluted | 28,085 | 26,692 | 21,588 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net gain (loss) on intra-entity foreign currency transactions | $ (800) | $ (1,200) | $ 1,400 |
Subsidiary dissolution gain | 68 | ||
Other Income (Expense), Net | |||
Subsidiary dissolution gain | $ 100 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common stock | Additional paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Cumulative Effect Period of Adoption Adjustment | Cumulative Effect Period of Adoption Adjustment Accumulated deficit |
Beginning Balance, Stockholders' equity at Dec. 31, 2019 | $ 106,548 | $ 21 | $ 139,700 | $ (3,939) | $ (29,234) | ||
Beginning Balances, Stockholders' equity (in shares) at Dec. 31, 2019 | 21,419 | ||||||
Exercise of stock awards and employee stock plan purchases, net of shares withheld for taxes | 3,685 | $ 1 | 3,684 | ||||
Exercise of stock awards and employee stock plan purchases, net of shares withheld for taxes (in shares) | 539 | ||||||
Stock-based compensation | 4,613 | 4,613 | |||||
Net income (loss) | (23,082) | (23,082) | |||||
Other comprehensive loss | 1,815 | 1,815 | |||||
Ending Balances, Stockholders' equity at Dec. 31, 2020 | 93,579 | $ 22 | 147,997 | (2,124) | (52,316) | ||
Ending Balances, Stockholders' equity (in shares) at Dec. 31, 2020 | 21,958 | ||||||
Issuance of common stock in public offering, net of issuance costs | 59,525 | $ 5 | 59,520 | ||||
Issuance of common stock in public offering, net of issuance costs (in shares) | 4,600 | ||||||
Exercise of stock awards and employee stock plan purchases, net of shares withheld for taxes | 6,829 | 6,829 | |||||
Exercise of stock awards and employee stock plan purchases, net of shares withheld for taxes (in shares) | 947 | ||||||
Stock-based compensation | 8,990 | 8,990 | |||||
Net income (loss) | (34,683) | (34,683) | |||||
Other comprehensive loss | (2,333) | (2,333) | |||||
Ending Balances, Stockholders' equity at Dec. 31, 2021 | $ 131,907 | $ 27 | 223,336 | (4,457) | (86,999) | $ (401) | $ (401) |
Ending Balances, Stockholders' equity (in shares) at Dec. 31, 2021 | 27,505 | 27,505 | |||||
Issuance of common stock in public offering, net of issuance costs | $ 30,774 | $ 3 | 30,771 | ||||
Issuance of common stock in public offering, net of issuance costs (in shares) | 2,884 | ||||||
Exercise of stock awards and employee stock plan purchases, net of shares withheld for taxes | 1,975 | 1,975 | |||||
Exercise of stock awards and employee stock plan purchases, net of shares withheld for taxes (in shares) | 579 | ||||||
Stock-based compensation | 15,802 | 15,802 | |||||
Net income (loss) | (37,431) | (37,431) | |||||
Subsidiary dissolution | (68) | (68) | |||||
Other comprehensive loss | 174 | 174 | |||||
Ending Balances, Stockholders' equity at Dec. 31, 2022 | $ 142,732 | $ 30 | $ 271,884 | $ (4,351) | $ (124,831) | ||
Ending Balances, Stockholders' equity (in shares) at Dec. 31, 2022 | 30,968 | 30,968 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss | $ (37,431) | $ (34,683) | $ (23,082) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 8,429 | 4,551 | 5,143 |
Impairment of long-lived assets and non-cash restructuring | 827 | 4,425 | 6,472 |
Gain on Lease termination | (908) | ||
Loss on extinguishment of debt | 1,343 | ||
Amortization of deferred financing costs | 173 | 12 | 149 |
Stock-based compensation | 15,802 | 8,990 | 4,613 |
Provision for inventory write-down | 4,946 | 4,064 | 5,531 |
Bad debt expense, net of recoveries | (229) | 14,491 | 3,833 |
Provision for sales returns | 2,556 | 1,132 | 1,303 |
Provision for warranty | 656 | 798 | 1,072 |
Unrealized loss (gain) on foreign currency transactions | 448 | 335 | 2,875 |
Subsidiary dissolution | (68) | ||
Loss (gain) of disposal of property, plant and equipment | (135) | (468) | 18 |
Deferred taxes | 1,329 | 316 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (68,575) | (6,624) | (18,782) |
Other receivable | (9,520) | (4,780) | 822 |
Inventories | (28,219) | (23,241) | (6,916) |
Contract assets | 1,488 | 3,915 | 11,341 |
Prepaid expenses and other assets | (6,363) | (2,965) | 703 |
Accounts payable | 61,697 | 19,092 | 11,136 |
Contract liabilities | 1,031 | 2,215 | 13 |
Accrued and other liabilities | 1,589 | (6,006) | (2,839) |
Net cash provided by (used in) operating activities | (50,898) | (14,326) | 5,064 |
Cash flows from investing activities: | |||
Proceeds from disposal of property, plant and equipment and other assets | 165 | 561 | |
Purchases of property, plant and equipment | (4,532) | (5,585) | (2,270) |
Acquisition of business, net of cash acquired | (23,647) | (4,459) | |
Net cash used in investing activities | (28,014) | (9,483) | (2,270) |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock in public offerings, net of issuance costs | 30,774 | 59,525 | |
Proceeds from long-term borrowings | 25,000 | ||
Repayments of long-term borrowings | (625) | (13,125) | |
Proceeds from short-term borrowings and line of credit, net | 4,000 | 13,774 | |
Repayments of short-term borrowings and line of credit, net | (13,278) | (16,696) | |
Proceeds from related party term loan | 5,041 | 18,341 | |
Repayments of related party term loan | (29,298) | ||
Payments for debt issue costs | (839) | ||
Payment of contingent consideration | (558) | ||
Proceeds from factored accounts receivable | 11,645 | ||
Proceeds from exercise of stock awards and employee stock plan purchases | 1,975 | 6,829 | 3,685 |
Net cash provided by financing activities | 64,768 | 23,778 | 17,624 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,031) | (917) | 534 |
Net change in cash, cash equivalents and restricted cash | (15,175) | (948) | 20,952 |
Cash, cash equivalents and restricted cash at beginning of period | 53,639 | 54,587 | 33,635 |
Cash, cash equivalents and restricted cash at end of period | 38,464 | 53,639 | 54,587 |
Reconciliation of cash, cash equivalents and restricted cash to balance sheets | |||
Cash and cash equivalents | 34,347 | 46,666 | 45,219 |
Restricted cash | 3,969 | 6,808 | 9,200 |
Long-term restricted cash | 148 | 165 | 168 |
Cash, cash equivalents and restricted cash at end of period | 38,464 | 53,639 | 54,587 |
Cash paid during the period for: | |||
Interest - bank and trade facilities | 1,177 | 83 | 788 |
Interest - related party | 65 | 108 | 981 |
Income taxes | $ 1,017 | $ 3,029 | $ 2,645 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | (1) Organization and Summary of Significant Accounting Policies (a) Description of Business DZS Inc. (referred to, collectively with its subsidiaries, as “DZS” or the “Company”) is a global provider of access and optical networking infrastructure and cloud software solutions that enable the emerging hyper-connected, hyper-broadband world and broadband experiences. The Company provides a wide array of reliable, cost-effective networking technologies and software to a diverse customer base. DZS was incorporated under the laws of the state of Delaware in June 1999 . The Company is headquartered in Plano, Texas with contract manufacturers located in the U.S., China, India, and Korea. The Company maintains offices to provide sales and customer support at global locations. Through 2022, we have also used our manufacturing facility in Seminole, Florida. In October 2022, we announced an agreement with Fabrinet, a third-party provider of electro-mechanical and electronic manufacturing and distribution services, to transition the sourcing, procurement, order-fulfillment, manufacturing and return merchandise authorization activities in the Company's Seminole facility to Fabrinet. The transition began in October 2022 and substantially completed in the beginning of 2023, whereupon the Company no longer manufactures its products. On August 26, 2020, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Delaware Secretary of State reflecting a company name change from Dasan Zhone Solutions, Inc. to DZS Inc. (b) Basis of Presentation The consolidated financial statements are prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. Certain prior-year amounts have been reclassified to conform to the current-year presentation. (c) Related Party Transactions The financial statements include disclosures of material related party transactions. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements are not required to be disclosed. As of December 31, 2022 , DASAN Networks, Inc. (“DNI”) owned approximately 29.4 % of the outstanding shares of the Company's common stock. See Note 12 Related Party Transactions for additional information about related party transactions. (d) Risks and Uncertainties The accompanying consolidated financial statements have been prepared in con(d) Risks and Uncertaintiesformity with U.S. GAAP, assuming the Company will continue as a going concern. The Company had a net loss of $ 37.4 million, $ 34.7 million, and $ 23.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022 , the Company had an accumulated deficit of $ 124.8 million and working capital of $ 86.5 million. As of December 31, 2022 , the Company had $ 38.5 million in cash and cash equivalents, which included $ 13.6 million in cash balances held by its international subsidiaries. Based on the Company's current plans and current business conditions, the Company believes that its existing cash, cash equivalents and available credit facility will be sufficient to satisfy its anticipated cash requirements for at least the next 12 months from the date of this Annual Report on Form 10-K. The COVID-19 pandemic continued to adversely affect significant portions of our business and our financial condition and results of operations in 2022. The emergence of the Omicron variant in late 2021 with a resulting increase in COVID cases in 2022 resulted in re-implementation of various measures, shutdowns, including travel bans and restrictions, limitations on public and private gatherings, business and port closures or operating restrictions, social distancing, and shelter-in-place orders. The health effects of the pandemic and the above measures taken in response thereto have had an effect on the global economy in general and have materially impacted and will likely continue to impact the Company’s financial condition, results of operations and cash flows. Given the ongoing and dynamic nature of the virus and its variants, and the worldwide response related thereto, it is difficult to predict the full impact of the COVID-19 pandemic on our business. We have experienced and continue to experience disruptions in our supply chain due to the pandemic, which has also impacted and may adversely impact our operations and the operations of some of our key suppliers. Supply chain pricing, freight and logistics costs, product and component availability, and extended lead-times became a challenge in 2021 and continue into 2022 as the world economy recovers from the COVID-19 pandemic. As we continue to incur elevated costs for components and expedite fees, our supply chain and operations teams continue to focus on managing through a constrained environment, thereby enabling DZS to maximize shipments despite elongated lead times. We remain cautious about continued supply chain headwinds that challenge the industry and anticipate a constrained supply chain environment to persist throughout 2023. We conduct significant business in South Korea, Japan, Vietnam, India, Spain, and Canada, as well as in other countries in Europe, Asia-Pacific, Middle East and Latin America, all of which subject us to foreign currency exchange rate risk. The local currencies of our significant foreign subsidiaries are the South Korean Won ("KRW"), Japanese Yen ("JPY"), Euro ("EUR), and Pound Sterling ("GBP"). Revenues and operating expenses are typically denominated in the local currency of each country and result from transactions by our operations in these countries. However, a significant portion of our international cost of sales is denominated in the U.S. Dollar (“USD”). During 2022, the USD appreciated significantly against the KRW, JPY, EUR and GBP which reduced the translated revenues, cost of sales and operating expenses transacted in local currencies, but not the USD based cost of sales, resulting in compressed margins and lower profitability. Late in 2022, exchange rates for these currencies returned to rates more comparable to historical rates. As of December 31, 2022, the Company's debt obligation was $ 24.1 million, net of unamortized issuance costs of $ 0.3 million and of which $ 1.3 million is scheduled for payment in 2023. While we believe that we are likely to achieve results of operations which would ensure loan covenant compliance, due to the potential impact of the COVID-19 pandemic, supply chain disruptions and foreign exchange fluctuations, there is a risk of non-compliance in the next 12 months and, accordingly, we have classified the entire amount as a current liability. While the borrowings under the term loan are currently classified as a current liability, the Company believes that it will maintain liquidity in the next 12 months after the balance sheet date to support its operations. Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, accounts receivable and contract assets. Cash and cash equivalents consist principally of financial deposits and money market accounts that are principally held with various domestic and international financial institutions with high credit standing. The Company’s customers include competitive and incumbent local exchange carriers, competitive access providers, internet service providers, wireless carriers and resellers serving these markets. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts based upon the expected collectability of accounts receivable. For the year ended December 31, 2022, one customer represented 13 % of net revenue. For the year ended December 31, 2021, two customers represented 19 % and 12 % of net revenue, respectively. For the year ended December 31, 2020, two customers represented 14 % and 13 % of net revenue, respectively. As of December 31, 2022 , no customer represented more than 10% of net accounts receivable. As of December 31, 2021, two customers represented 26 % and 10 % of net accounts receivable, respectively. As of December 31, 2022 , and December 31, 2021, net accounts receivable from customers in countries other than the United States represented 86 % and 79 %, respectively. In 2017, the Company entered into an agreement with a customer in India to supply product for a state sponsored broadband project. The Company substantially completed its obligations under the agreement in 2018. The Company billed the customer, which is a state government sponsored entity, approximately $ 59.0 million and collected payments of approximately $ 41.7 million by December 31, 2020. In late March 2021, the customer’s state government parent experienced difficulty passing a budget impacting the ability of the customer to make remaining agreed-upon payments to us. In light of this development, the Company recorded an allowance that covered the entire balance unpaid by the customer. Subsequent to March 2021, the Company recovered approximately $ 2.4 million of accounts receivable related to the customer. As of December 31, 2022 the Company has a recorded allowance for doubtful accounts of $ 13.1 million related to this receivable. The Company will continue to pursue collection of the entire outstanding balance and any amounts collected will be recognized in the period which they are received. In the event the Company’s efforts to collect from this customer prove unsuccessful, DZS may seek payment through other means, including through legal action. (e) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. (f) Revenue Recognition Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue primarily from sales of products and services, including, extended warranty service, software and customer support. Revenue from product sales is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery, dependent upon the terms of the underlying contract. Many of the Company’s arrangements include customer acceptance provisions which the Company typically considers a formality. In situations when the customer acceptance terms are more than a formality, transfer of control usually occurs upon obtaining the signed acceptance certificate from the customer. In those instances where transfer of control occurs prior to obtaining the signed acceptance certificate, the Company considers a number of factors, including successful completion of customer testing to demonstrate that the delivered products meet all the acceptance criteria specified in the arrangement, its experience with the customer and its experience with other contracts for similar products. Revenue from services is generally recognized over time on a ratable basis over the contract term, using an output measure of progress, as the contracts usually provide the customer equal benefit throughout the contract period. The Company typically invoices customers for support contracts in advance, for periods ranging from one to five years . Transaction price is calculated as selling price net of variable consideration. Sales to certain distributors are made under arrangements which provide the distributors with volume discounts, price adjustments, and other allowances under certain circumstances. These adjustments and allowances are accounted for as variable consideration. To estimate variable consideration, the Company analyzes historical data and current economic trends, and changes in customer demand for the Company's products, among other factors. Historically, variable consideration has not been a significant component of the Company’s contracts with customers. For contracts with customers that contain multiple performance obligations, the Company accounts for the promised performance obligations separately as individual performance obligations if they are distinct. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, including the degree of interrelation and interdependence between obligations and whether or not the good or service significantly modifies or transforms another good or service in the contract. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for products are determined using either an adjusted market assessment or expected cost-plus margin . For customer support and extended warranty services, standalone selling price is primarily based on the prices charged to customers, when sold separately. Unsatisfied and partially unsatisfied performance obligations as of the end of the reporting period primarily consist of products and services for which customer purchase orders have been accepted and that are in the process of being delivered. The Company records contract assets when it satisfies a performance obligation but does not have an unconditional right to consideration and records accounts receivable when it satisfies a performance obligation and has an unconditional right to consideration. The Company records contract liabilities when cash payments (or unconditional rights to receive cash) are received in advance of fulfilling its performance obligations. The Company’s payment terms vary by the type and location of its customer and the products or services offered. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. Other related policies and revenue information Warranties Products sold to customers include standard warranties, typically for one year , covering physical operation and software bug fixes and minor updates such that the product continues to function according to published technical specifications. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified. Therefore, standard warranties are not considered separate performance obligations. Instead, the expected cost of warranty is accrued as expense as discussed below. Optional extended warranties, typically between one and three years , and for up to five years , are sold with certain products and include additional support services. The transaction price for extended warranties is accounted for as service revenue and recognized ratably over the life of the contract. The Company records estimated costs related to standard warranties upon product shipment or upon identification of a specific product failure. The Company recognizes estimated warranty costs when it is probable that a liability has been incurred and the amount of loss is reasonably estimable. The estimates are based upon historical and projected product failure and claim rates, historical costs incurred in correcting product failures and information available related to any specifically identified product failures. Significant judgment is required in estimating costs associated with warranty activities and the Company's estimates are limited to information available to the Company at the time of such estimates. In some cases, such as when a specific product failure is first identified or a new product is introduced, the Company may initially have limited information and limited historical failure and claim rates upon which to base its estimates, and such estimates may require revision in future periods. The recorded amount is adjusted from time to time for specifically identified warranty exposure. Contract Costs The Company recognizes an asset for certain costs to fulfill a contract if it is determined that such costs relate directly to a contract or anticipated contracts, can be determined to generate or enhance resources that will be used in satisfying related performance obligations in the future, and are expected to be recovered. Such costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods to which the asset relates. Contract costs primarily consist of sales commissions that are amortized as sales and marketing expense. Financing The Company applies the practical expedient not to adjust the promised amount of consideration for the effects of a financing component if the Company expects, at contract inception, that the period between when the Company transfers a good or service to the customer and when the customer pays for the good or service will be one year or less. During the years ended December 31, 2022, 2021, and 2020, such financing components were not significant. Shipping and Handling The Company has elected to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost rather than as an additional promised service. As a result, the Company accrues the costs of shipping and handling when the related revenue is recognized . Unsatisfied Performance Obligations The majority of the Company's performance obligations in its contracts with customers relate to contracts with duration of less than one year. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less, based on the elected practical expedients. The transaction price allocated to noncancellable unsatisfied performance obligations included in contracts with duration of more than 12 months is reflected in contract liabilities – non-current on the consolidated balance sheets. Disaggregation of Revenue The following table presents the revenues by source (in thousands): Years ended December 31, 2022 2021 2020 Products $ 335,258 $ 330,093 $ 280,988 Services and software 40,433 20,113 19,652 Total $ 375,691 $ 350,206 $ 300,640 The following table present revenues by geographical region (in thousands): Years ended December 31, 2022 2021 2020 Americas $ 107,392 $ 101,473 $ 61,900 Europe, Middle East, Africa 79,286 70,046 64,580 Asia 189,013 178,687 174,160 Total $ 375,691 $ 350,206 $ 300,640 (g) Allowances for Doubtful Accounts and Sales Returns The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make payments for amounts owed to the Company. The allowance for doubtful accounts is recorded as an expense under selling, marketing, general and administrative expenses. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts based upon the expected collectability of accounts receivable using historical loss rates adjusted for customer-specific factors and current economic conditions. The Company determines historical loss rates on a rational and systematic basis. The Company performs periodic assessments of its customers’ liquidity and financial condition through analysis of information obtained from credit rating agencies, financial statement review and historical and current collection trends. Though the allowance for doubtful accounts at each balance sheet date represents the Company’s best estimate at that point in time, an increase or decrease to the allowance for doubtful accounts may be required in the future based on updated historical loss rates, customer-specific factors and economic conditions or if previously reserved balances have been collected. Activity under the Company’s allowance for doubtful accounts is comprised as follows (in thousands): Years ended December 31, 2022 2021 2020 Balance at beginning of year $ 17,735 $ 3,954 $ 393 Charged to expense, net of recoveries ( 229 ) 14,491 3,833 Utilization and write off ( 117 ) ( 126 ) ( 331 ) Cumulative effect of ASC 326 adoption 401 — — Foreign exchange impact ( 1,606 ) ( 584 ) 59 Balance at end of year $ 16,184 $ 17,735 $ 3,954 The Company records an allowance for sales returns for estimated future product returns related to current period product revenue. The allowance for sales returns is recorded as a reduction of revenue and an increase to accrued and other liabilities. The Company bases its allowance for sales returns on periodic assessments of historical trends in product return rates and current approved returned products. If the actual future returns were to deviate from the historical data on which the reserve had been established, the Company’s future revenue could be adversely affected. Activity under the Company’s allowance for sales returns is comprised as follows (in thousands): Years ended December 31, 2022 2021 2020 Balance at beginning of year $ 873 $ 390 $ 343 Charged to revenue 2,556 1,132 1,303 Utilization and write off ( 2,279 ) ( 649 ) ( 1,256 ) Balance at end of year $ 1,150 $ 873 $ 390 (h) Inventories Inventories are stated at the lower of cost or net realizable value, with cost being computed based on an adjusted standard basis, which approximates actual cost on an average or first-in, first-out basis. In assessing the net realizable value of inventories, the Company is required to make judgments as to future demand requirements and compare these with the current or committed inventory levels. Once inventory has been written down to its estimated net realizable value, its carrying value cannot be increased due to subsequent changes in demand. To the extent that a severe decline in forecasted demand occurs, or the Company experiences a higher incidence of inventory obsolescence due to rapidly changing technology and customer requirements, the Company may incur significant expenses for excess and obsolete inventory. The Company also evaluates the terms of its agreements with its suppliers and establishes accruals for estimated losses on adverse purchase commitments as necessary, applying the same lower of cost or net realizable value approach that is used to value inventory. (i) Foreign Currency Translation For operations outside the United States, the Company translates assets and liabilities of foreign subsidiaries, whose functional currency is the applicable local currency, at end of period exchange rates. Revenues and expenses are translated at periodic average rates. The adjustment resulting from translating the financial statements of such foreign subsidiaries is included in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity. Realized and unrealized gains and losses on foreign currency transactions are included in other income (expense) in the accompanying consolidated statements of comprehensive income (loss). Our primary exposure to foreign currency exchange rate movements is with our Korea subsidiary, that has a Korean Won functional currency, our Japan subsidiary, that has a Japanese Yen functional currency, and our Germany subsidiary, that has a Euro functional currency. (j) Comprehensive Income (Loss) There have been no material items reclassified out of accumulated other comprehensive income (loss) and into net income (loss). The Company’s other comprehensive income (loss) for the years ended December 31, 2022 , 2021, and 2020 is primarily comprised of foreign currency translation gains and losses and actuarial gains and losses from the Company’s pension liabilities. (k) Property, Plant and Equipment Property, plant, and equipment are stated at cost, less accumulated depreciation, and are depreciated using the straight-line method over the estimated useful life of each asset. The useful life of each asset category is as follows: Asset Category Useful Life Furniture and fixtures 3 to 4 years Machinery and equipment 2 to 10 years Computers and software 3 to 5 years Leasehold improvements Shorter of remaining lease term Upon retirement or sale, the cost and related accumulated depreciation of the asset are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. (l) Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Factors the Company considers important which could trigger an impairment review, include, but are not limited to, significant changes in the manner of use the assets, significant changes in the strategy for the Company's overall business or significant negative economic trends. If this evaluation indicates that the value of an intangible asset may be impaired an assessment of the recoverability of the net carrying value of the asset over its remaining useful life is made. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future net undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future net undiscounted cash flows, an impairment expense is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. If this assessment indicates that the cost of an intangible asset is not recoverable, based on the estimated undiscounted future cash flows or other comparable market valuations of the entity or technology acquired over the remaining amortization period, the net carrying value of the related intangible asset will be reduced to fair value and the remaining amortization period may be adjusted. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. Any assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. (m) Goodwill and Other Intangible Assets Goodwill and other acquisition-related intangible assets not subject to amortization are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. The quantitative goodwill impairment test is a two-step process with step one requiring the comparison of the reporting unit's estimated fair value with the carrying amount of its net assets. If necessary, step two of the impairment test determines the amount of goodwill impairment to be recorded when the reporting unit's recorded net assets exceed its fair value. The Company performs its annual impairment testing as of October 31. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. (n) Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets and certain tangible assets such as inventory. Critical estimates in valuing certain tangible and intangible assets include but are not limited to future expected cash flows from the underlying assets and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. (o) Stock-Based Compensation Stock-based compensation cost is measured at the grant date of the awards based on the estimated fair value of the awards. The Company determines the fair value of restricted stock units based on the Company’s stock price on the date of grant. The Company uses the Black Scholes model to estimate the fair value of options, which is affected by the Company's stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company's expected stock price volatility over the expected term of the awards, risk-free interest rates and expected dividends. The expected stock price volatility is based on the weighted average of the historical volatility of the Company's common stock over the most recent period commensurate with the estimated expected life of the Company's stock options. The expected term of options granted is determined based on SAB 107 simplified method. Risk-free interest rates reflect the yield on zero-coupon United States Treasury securities. The Company amortizes the value of the stock-based compensation to expense using the straight-line method. The value of the award is recognized as expense over the requisite service periods in the Company’s consolidated statements of comprehensive income (loss). The Company accounts for forfeitures as they occur. (p) Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and the income tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company does not recognize a tax benefit unless it concludes that it is more likely than not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position. If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that, in the Company’s judgment, is greater than 50 percent likely to be realized. The Company records interest and penalties related to uncertain tax positions in interest expense and in general and administrative expense, respectively. (q) Net Income (Loss) per Share Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss) gives effect to common stock equivalents; however, potential common equivalent shares are excluded if their effect is antidilutive. Potential common stock equivalent shares are composed of restricted stock units, unvested restricted shares and incremental shares of common stock issuable upon the exercise of stock options. (r) Research and Development Costs ASC 985-20 requires the capitalization of certain software development costs that are incurred subsequent to the date technological feasibility is established and prior to the date the product is generally available for sale. DZS defines technological feasibility as being attained at the time a working model is completed. There is generally no significant passage of time between achievement of technological feasibility and the availability of our software for general release, and software develo |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
Business Combinations | (2) Business Combinations ASSIA Acquisition On May 27, 2022, the Company acquired certain assets and liabilities of Adaptive Spectrum and Signal Alignment, Incorporated (“ASSIA”), an industry pioneer of broadband access quality-of-experience and service assurance software solutions (the “ASSIA Acquisition”). The core assets acquired include the CloudCheck® WiFi experience management and Expresse® access network optimization software solutions. These software solutions add powerful data analytics and network intelligence capabilities to DZS Cloud, including cloud-managed WiFi solutions, access network optimization and intelligent automation tools. The CloudCheck® and Expresse® solutions are currently deployed in over 125 million connected homes globally, and many of these connections now represent recurring software revenue opportunities for DZS. The initial purchase consideration was $ 25.0 million, including a $ 2.5 million holdback that will be released in 13 months following the transaction close date. In October 2022, the Company agreed to pay an additional $ 1.35 million of purchase consideration to settle certain unresolved matters related to the ASSIA Acquisition. The acquisition was recorded as a business combination with valuation of the assets acquired and liabilities assumed recorded at their acquisition date fair value determined using level three inputs, defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Due to the complexity of the valuation of the assets acquired and the liabilities assumed, and the timing of these activities, certain amounts included in the consolidated financial statements, including working capital, long-lived assets, intangible assets, deferred taxes and goodwill, are provisional and subject to additional adjustments within the measurement period as permitted by Topic 805. In the third and the fourth quarters of 2022, we recorded measurement-period adjustments related to purchase consideration, working capital, and intangible assets acquired. These adjustments resulted into $ 9.0 million reduction of goodwill. The adjustments did not have a material impact on the amortization expense recorded in the previous quarters for intangible assets acquired. The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the ASSIA Acquisition (in thousands), prepared on a provisional basis: Provisional allocation of purchase consideration Cash and cash equivalents $ 203 Accounts receivable 2,322 Other assets 407 Right-of-use assets 2,172 Property, plant and equipment 232 Intangible assets 30,200 Accounts payable ( 75 ) Contract liabilities ( 19,550 ) Operating lease liabilities ( 2,612 ) Accrued and other liabilities ( 756 ) Goodwill 13,807 Total purchase consideration $ 26,350 The purchase price allocation resulted in the recognition of goodwill of approximately $ 13.8 million, which included the experienced workforce and the expected synergies from combining operations . The Company expects no goodwill to be deductible for tax purposes. The following table represents the preliminary estimated fair value and useful lives of identifiable intangible assets acquired (estimated fair value in thousands): Estimated Estimated fair value useful life Intangible assets acquired Customer relationships $ 18,600 15 years Customer backlog 5,100 10 years Developed technology 6,200 5 - 7 years Tradenames 300 10 years Total intangible assets $ 30,200 We included $ 18.1 million of revenue generated by ASSIA since the acquisition date in the Company’s consolidated statements of comprehensive income (loss) for the reporting period. Optelian Acquisition On February 5, 2021, the Company acquired Optelian Access Networks Corporation (“Optelian”), a corporation incorporated under the laws of Canada and registered extra-provincially in the Province of Ontario, pursuant to an acquisition agreement whereby the Company purchased all the outstanding shares of Optelian. Following the closing of the transaction, Optelian became the Company’s wholly owned subsidiary. Optelian was a leading optical networking solution provider. This acquisition introduced the “O-Series” to the DZS portfolio of carrier grade optical networking products with up to 400 gigabits per second (Gig) and above capability, expanding the DZS product portfolio by providing environmentally hardened, high capacity, and flexible solutions at the network edge. The purchase price of $ 7.5 million included cash paid to the shareholders and option holders of Optelian, cash paid to retire Optelian's outstanding debt on the date of acquisition, and contingent payments to shareholders. The payment to shareholders and option holders included a $ 0.3 million holdback, which was released during the third quarter of 2022, and $ 1.9 million contingent consideration based on a certain percentage of future revenue of certain Optelian products through the end of 2023. We completed the purchase price allocation for Optelian acquisition in 2021. The purchase price allocation resulted in the recognition of goodwill of approximately $ 1.9 million, which primarily related to the expected synergies from combining operations. RIFT Acquisition On March 3, 2021, the Company acquired substantially all of the assets of RIFT, Inc., a network automation solutions company, and all the outstanding shares of RIFT.IO India Private Limited, a wholly owned subsidiary of RIFT, Inc. (collectively “RIFT”). RIFT developed a carrier-grade RIFT.ware software platform that simplifies the deployment of any slice, service, or application on any cloud. This acquisition introduced DZS Xtreme, a solution within the DZS Cloud portfolio, to the overall portfolio of DZS systems and software solutions. The total purchase consideration was $ 0.5 million, including a $ 0.2 million holdback that was released in April of 2021 following the fulfillment of certain requirements in the purchase agreement. We completed the purchase price allocation for RIFT acquisition in 2021. The purchase price allocation resulted in the recognition of goodwill of approximately $ 0.2 million, which primarily related to the expected synergies from combining operations. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | (3) Fair Value Measurement The Company utilizes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. Assets and Liabilities Measured at Fair Value on a Recurring Basis The carrying values of financial instruments such as cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. The carrying value of the Company's debt approximates its fair values based on the current rates available to the Company for debt of similar terms and maturities. The Company classifies its contingent liability from Optelian acquisition within Level 3 as it includes inputs not observable in the market. The Company estimates the fair value of contingent consideration as the present value of the expected contingent payments, determined using the revenue forecast for certain Optelian products through the end of 2023. The fair value of contingent liability is generally sensitive to changes in the revenue forecast during the payout period. The change in the respective fair value is included in selling, marketing, general and administrative expenses on the consolidated statement of comprehensive income (loss). The following table reconciles the beginning and ending balances of the Company’s Level 3 contingent liability (in thousands): Year ended December 31, 2022 2021 Balance at the beginning of the period $ 2,121 $ — Initial fair value of contingent liability — 1,897 Cash payments ( 558 ) — Net change in fair value ( 407 ) 224 Balance at the end of the period $ 1,156 $ 2,121 |
Cash and Cash Equivalents and R
Cash and Cash Equivalents and Restricted Cash | 12 Months Ended |
Dec. 31, 2022 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents and Restricted Cash | (4) Cash and Cash Equivalents and Restricted Cash As of December 31, 2022 and 2021, the Company's cash, cash equivalents, and restricted cash consisted of financial deposits. Cash, cash equivalents and restricted cash held within the U.S. totaled $ 24.9 million and $ 22.3 million as of December 31, 2022 and December 31, 2021, respectively. Cash and cash equivalents held within the U.S. are held at FDIC insured depository institutions. Cash, cash equivalents and restricted cash held outside the U.S. totaled $ 13.6 million and $ 31.3 million as of December 31, 2022 and December 31, 2021, respectively. Restricted cash consisted primarily of cash collateral for performance bonds and warranty bonds . Long term restricted cash was $ 0.1 million and $ 0.2 million as of December 31, 2022 and December 31, 2021, respectively, and is included in other assets on the consolidated balance sheets. |
Balance Sheet Detail
Balance Sheet Detail | 12 Months Ended |
Dec. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Detail | (5) Balance Sheet Detail Balance sheet detail as of December 31, 2022 and 2021 is as follows (in thousands): Inventories As of December 31, 2022 2021 Raw materials $ 37,354 $ 34,512 Work in process 1,050 1,427 Finished goods 40,109 20,954 Total inventories $ 78,513 $ 56,893 Property, plant and equipment As of December 31, 2022 2021 Machinery and equipment $ 17,214 $ 14,278 Leasehold improvements 5,683 5,219 Computers and software 4,713 3,217 Furniture and fixtures 1,748 1,771 Construction in progress and other 1,264 2,937 30,622 27,422 Less: accumulated depreciation and amortization ( 21,062 ) ( 17,394 ) Less: government grants ( 82 ) ( 186 ) Total property, plant and equipment, net $ 9,478 $ 9,842 Depreciation expense associated with property, plant and equipment was $ 4.9 million, $ 2.9 million and $ 2.2 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022 , other assets included $ 10.5 million of capitalized cloud computing implementation costs related to the Company's enterprise resource planning and reporting software as compared to $ 4.2 million as of December 31, 2021. Accrued and other liabilities As of December 31, 2022 2021 Accrued taxes payable $ 6,214 $ 2,306 Accrued compensation 8,897 7,230 Accrued acquisition holdback 2,500 321 Accrued warranty 1,896 1,981 Accrued sales returns 1,150 873 Other accrued expenses 6,902 3,321 $ 27,559 $ 16,032 The Company accrues for warranty costs based on historical trends for the expected material and labor costs to provide warranty services. The Company’s standard warranty period is one year from the date of shipment with the ability for customers to purchase an extended warranty of up to five years from the date of shipment. The following table summarizes the activity related to the product warranty liability: Years ended December 31, 2022 2021 2020 Balance at the beginning of the period $ 1,981 $ 1,522 $ 1,611 Charged to cost of revenue 656 798 1,072 Claims and settlements ( 704 ) ( 404 ) ( 1,189 ) Foreign exchange impact ( 37 ) 65 28 Balance at the end of the period $ 1,896 $ 1,981 $ 1,522 Contract Balances The opening and closing balances of current and long-term contract assets and contract liabilities related to contracts with customers are as follows: Contract Contract December 31, 2021 $ 2,184 $ 9,135 December 31, 2022 576 29,641 Increase (decrease) $ ( 1,608 ) $ 20,506 The decrease in contract assets during the year ended December 31, 2022 was primarily due to the invoicing of certain unbilled balances where revenue recognition criteria have been met as of December 31, 2021. The increase in contract liabilities during 2022 was primarily due to the assumption of ASSIA contract liabilities in conjunction with the ASSIA Acquisition. Refer to Note 2 Business Combinations for further information. The amount of revenue recognized during the year ended December 31, 2022 that was included in the prior period contract liability balance was $ 6.0 million. This revenue consists of services provided to customers who had been invoiced prior to the current year. We expect to recognize approximately 73 % of outstanding contract liabilities as revenue over the next 12 months and the remainder thereafter. The balance of contract cost deferred at December 31, 2022 and 2021 was $ 1.0 million and $ 0.8 million, respectively. During the year ended December 31, 2022, the Company recorded $ 0.7 million in amortization related to contract cost deferred as of December 31, 2021. |
Restructuring and Other Charges
Restructuring and Other Charges | 12 Months Ended |
Dec. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | (6) Restructuring and other charges In 2021, the Company made the strategic decision to relocate manufacturing functions of DZS GmbH and Optelian to Seminole, Florida and to transition the above subsidiaries to sales and research and development centers. The Company incurred approximately $ 13.1 million of restructuring and other charges since the beginning of its restructuring activities in the first quarter of 2021. For the year ended December 31, 2022 , the Company recorded $ 0.8 million of restructuring related costs, consisting primarily of logistics costs and professional services related to legal and accounting support. For the year ended December 31, 2021, the Company recorded $ 12.3 million of restructuring related costs, consisting of termination-related benefits of $ 8.5 million, an impairment of long-lived assets charge of $ 2.7 million primarily related to right-of-use assets from operating leases, and other costs of $ 1.1 million. As of December 31, 2022, the Company paid in full its liability related to termination benefits associated with DZS GmbH and Optelian restructuring. On September 17, 2022 , DZS signed an agreement with Fabrinet, a third-party provider of electro-mechanical and electronic manufacturing and distribution services, to transition the sourcing, procurement, order-fulfillment, manufacturing and return merchandise authorization activities in the Company’s Seminole, Florida facility to Fabrinet. The agreement was announced on October 4, 2022. The transition to Fabrinet began in October 2022 and substantially completed in the beginning of 2023. Post transition, the DZS Seminole, Florida-based operations, supply chain and manufacturing workforce will be reduced by approximately two-thirds and the remaining team will be relocated to an appropriately sized facility. For the year ended December 31, 2022 , the Company recorded $ 3.4 million of restructuring related costs, consisting of accelerated depreciation of manufacturing related assets of $ 1.3 million, termination-related benefits of $ 0.7 million, loss on inventory sold to Fabrinet of $ 0.5 million, and other costs of $ 0.9 million. The Company accounted for the one-time employee termination benefits in accordance with ASC 420, Exit or Disposal Cost Obligations, and recognized the respective liability when the final terms of the benefit arrangement were communicated to the affected employees. As of December 31, 2022 , the Company had $ 0.7 million liability related to termination benefits associated with Seminole restructuring. The Company also included into restructuring and other charges approximately $ 0.4 million of implementation costs related to the Company’s new enterprise resource planning and reporting software. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | (7) Goodwill and Intangible Assets The following table summarizes the activity related to Goodwill (in thousands): As of December 31, 2022 2021 Balance at the beginning of the period, gross $ 7,148 $ 4,980 Accumulated impairment at the beginning of the period ( 1,003 ) ( 1,003 ) Goodwill from acquisitions 13,807 2,168 Foreign exchange impact — — Balance at the end of the period $ 19,952 $ 6,145 The accumulated impairment of goodwill was $ 1.0 million as of both December 31, 2022 and 2021. The Company recognized no impairment loss for goodwill for the years ended December 31, 2022, 2021, and 2020. During the year ended December 31, 2022 , the Company recorded goodwill of $ 13.8 million related to the ASSIA Acquisition. Refer to Note 2 Business Combinations for further information. Intangible assets consisted of the following (in thousands except for years): As of December 31, 2022 Gross Carrying Accumulated Net Weighted Average Remaining Useful Life Customer relationships $ 24,330 $ ( 4,759 ) $ 19,571 13.2 years Customer backlog 5,100 ( 506 ) 4,594 9.4 years Developed technology 11,207 ( 4,463 ) 6,744 5.0 years In-process research and development 890 ( 340 ) 550 3.1 years Tradenames 300 ( 17 ) 283 9.4 years Total intangible assets, net $ 41,827 $ ( 10,085 ) $ 31,742 10.7 years As of December 31, 2021 Gross Carrying Accumulated Net Weighted Average Remaining Useful Life Developed technology $ 5,007 $ ( 3,464 ) $ 1,543 4.1 years Customer relationships 5,730 ( 2,886 ) 2,844 4.6 years In-process research and development 890 ( 162 ) 728 4.1 years Total intangible assets, net $ 11,627 $ ( 6,512 ) $ 5,115 4.4 years During the year ended December 31, 2022 , the Company recorded $ 18.6 million, $ 5.1 million, $ 6.2 million and $ 0.3 million in customer relationships, orders backlog, developed technology, and tradenames, respectively, related to the ASSIA Acquisition. Refer to Note 2 Business Combinations for further information. Amortization expense associated with intangible assets was $ 3.6 million, $ 1.6 million, and $ 3.0 million for the years ended December 31, 2022, 2021, and 2020, respectively. During 2020, the Company recorded an impairment charge of $ 6.5 million for DZS GmbH intangible assets as part of the Company’s evaluation for impairment, utilizing a present value cash flow model to determine the fair value of the intangible assets. The Company determined that the intangible assets related to DZS GmbH were impaired, due to the financial performance of the reporting unit and loss of a significant customer. The impairment expense was comprised of $ 3.3 million for developed technology, $ 2.3 million for customer relationships, and $ 0.9 million for trade names, respectively. The impairment charge is included in impairment of long-lived assets on the consolidated statements of comprehensive income (loss). The Company did not identify any triggering events for potential impairment of intangible assets in 2022 and 2021. As of December 31, 2022, expected future amortization expense for the years indicated was as follows (in thousands): 2023 $ 5,283 2024 5,283 2025 5,277 2026 4,095 2027 3,143 Thereafter 8,661 Total $ 31,742 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | (8) Debt JPMorgan Credit Facility On February 9, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) by and between the Company, as borrower, certain subsidiaries of the Company, as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement originally provided for revolving loans (the "Revolving Credit Facility") in an aggregate principal amount of up to $ 30.0 million, up to $ 15.0 million of which is available for letters of credit, and was scheduled to mature on February 9, 2024 . The maximum amount that the Company can borrow under the Credit Agreement is subject to a borrowing base, which is based on a percentage of eligible accounts receivable and eligible inventory, subject to reserves and other adjustments, plus $ 10.0 million. On May 27, 2022, the Company entered into a First Amendment to Credit Agreement (the “Amendment”), which amends the Credit Agreement dated February 9, 2022 with the Company, as borrower, certain subsidiaries of the Company, as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Amendment, among other things, (1) provides for a term loan (the “Term Loan”) in an aggregate principal amount of $ 25.0 million with a maturity date of May 27, 2027 , (2) extends the maturity date of the $ 30.0 million Revolving Credit Facility to May 27, 2025 , (3) permits the ASSIA Acquisition, (4) modifies the applicable margin for borrowings under the Credit Agreement to be, at the Company’s option, either (i) the adjusted term SOFR rate plus a margin ranging from 3.0 % to 3.5 % per year or (ii) the prime rate plus a margin ranging from 2.0 % to 2.5 % per year, in each case depending on the Company’s leverage ratio, (5) modifies the letter of credit fee such that it ranges from 3.0 % to 3.5 %, depending on the Company’s leverage ratio, (6) modifies the commitment fee on the unused portion of the Revolving Credit Facility to range from 0.25 % to 0.35 % per year, depending on the Company’s leverage ratio, (7) modifies the method of calculating the leverage ratio, and (8) modifies the financial covenants to (i) increase the maximum permitted leverage ratio to 3.00 to 1.00 through September 30, 2022, 2.50 to 1.00 thereafter through September 30, 2023, and 2.00 to 1.00 thereafter and (ii) replace the minimum liquidity requirement with a minimum permitted fixed charge coverage ratio of 1.25 to 1.00. On May 27, 2022, the Company borrowed the full amount of the Term Loan to finance the ASSIA Acquisition. As of December 31, 2022 , the Company's debt obligation under the Term Loan was $ 24.1 million, net of unamortized issuance cost of $ 0.3 million. The Company had $ 4.0 million outstanding borrowings and $ 0.1 million in letters of credit issued under the $ 30.0 million Revolving Credit Facility as of December 31, 2022 , and $ 25.9 million was available to the Company for additional borrowing. The Company had no debt obligation as of December 31, 2021. On February 15, 2023, the Company entered into a Second Amendment to Credit Agreement (the "Second Amendment"), which amends the Credit Agreement dated February 9, 2022 (as previously amended on May 27, 2022). The Second Amendment, among other things, (1) modifies the financial covenants to (i) suspend the maximum leverage ratio requirement of 2.50 to 1.00 until the fiscal quarter ending September 30, 2023 and (ii) suspend the minimum fixed charge coverage ratio requirement of 1.25 to 1.00 until the fiscal quarter ending December 31, 2023, (2) adds new financial covenants to require (i) minimum liquidity of $ 30 million for the fiscal quarter ending March 31, 2023, $ 35 million for the fiscal quarters ending June 30, 2023 and September 30, 2023, and $ 20 million at any time until September 30, 2023, and (ii) minimum EBITDA (as defined in the Credit Facility) of ($ 1 million) for the fiscal quarter ending March 31, 2023 and $ 1 for the fiscal quarter ending June 30, 2023, (3) increases the applicable margin for adjusted term SOFR borrowings and prime rate borrowings to 4.0 % and 3.0 %, respectively, when the Company’s leverage ratio exceeds 2.50 to 1.00, (4) increases the commitment fee on the unused portion of the revolving commitment to 0.40 % per year when the Company’s leverage ratio exceeds 2.50 to 1.00, and (5) prohibits dividends and other distributions and tightens certain covenants. Due to the risk of non-compliance with certain financial covenants in the next 12 months, we presented our long-term debt obligation of $ 22.8 million within the current portion of long-term debt on the consolidated balance sheet as of December 31, 2022. As of December 31, 2022, the future principal maturities of the Term Loan for each of the next five years are as follows (in thousands): 2023 $ 1,250 2024 1,563 2025 1,875 2026 2,188 2027 17,499 Total $ 24,375 Related Party Debt On October 31, 2022, DNS Korea, the Company’s wholly-owned subsidiary, entered into a Loan Agreement with DNI (the “November 2022 DNI Loan”). The November 2022 DNI Loan was negotiated and approved on behalf of the Company and its subsidiaries by the audit committee of the Board of Directors of the Company which consists of directors determined to be independent from DNI. The November 2022 DNI Loan consists of a term loan in the amount of KRW 7.2 billion ($ 5.0 million USD), with interest payable monthly at an annual rate of 6.0 % and maturing on January 31, 2023 . No principal payments are due on the November 2022 DNI Loan until the maturity date, but DNS Korea may prepay the loan, or a portion thereof, without penalty. As of December 31, 2022, KRW 7.2 billion ($ 5.7 million USD) was outstanding. As security for the November 2022 DNI Loan, DNS Korea granted a security interest to DNI in inventory of KRW 28.2 billion ($ 22.4 million USD) in its Janghowon warehouse, which should be maintained at a minimum of KRW 10.0 billion ($ 7.9 million USD), and account receivable for 2 certain customers in the amount to KRW 20 billion ($ 15.8 million USD). In the first quarter of 2023, the entire outstanding balance on this term loans was repaid and DNS Korea entered into a new short-term loan arrangement with DNI and borrowed KRW 5 billion ($ 4.1 million USD). During prior periods, certain of the Company's subsidiaries entered into term loan arrangements with DNI. In the first quarter of 2021, the entire outstanding balance of $ 29.8 million on these term loans was repaid. Interest expense on related party borrowings was $ 0.1 million , $ 0.1 million and $ 1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2021, the Company had no borrowings outstanding from related parties. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | (9) Stockholders’ Equity General The Company has authorized the issuance of 36 million shares of common stock and 25 million shares of preferred stock, with a par value of $ 0.001 . As of December 31, 2022 , the Company had 31 million shares of common stock issued and outstanding. As of December 31, 2022 , the Company had reserved 5.0 million shares of common stock for the issuance of options and restricted stock units granted under the Company’s 2017 Stock Incentive Plan and Non-Qualified Inducement Stock Option Grant, and for the issuance of shares under the Company's 2018 Employee Stock Purchase Plan. The Company did no t issue any shares of preferred stock as of December 31, 2022. On November 16, 2022, we entered into an underwriting agreement to sell 2.9 million shares of Common Stock (including 0.4 million shares issued pursuant to the underwriters’ option to purchase additional shares) at a price of $ 11.50 per share in an underwritten public offering. The equity offering closed on November 21, 2022 and resulted in gross proceeds of approximately $ 33.2 million and net proceeds, after deducting underwriting discounts and commissions and offering expenses, of approximately $ 30.8 million. On January 26, 2021, the Company sold 4.6 million shares of common stock (including 0.6 million shares issued pursuant to the underwriters’ option to purchase additional shares) at a price of $ 14.00 per share in an underwritten public offering. The equity offering closed on January 29, 2021 and resulted in gross proceeds to the Company of approximately $ 64.4 million and net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses, of approximately $ 59.5 million. Changes in Accumulated Other Comprehensive Income (Loss) The table below summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax (in thousands): As of December 31, 2022 2021 2020 Beginning accumulated other comprehensive income $ ( 4,457 ) $ ( 2,124 ) $ ( 3,939 ) Actuarial loss for pension plan 4,278 1,713 ( 981 ) Foreign currency translation adjustments, net ( 4,172 ) ( 4,046 ) 2,796 Ending accumulated other comprehensive income $ ( 4,351 ) $ ( 4,457 ) $ ( 2,124 ) During the years ended December 31, 2022 and 2021, the Company recorded foreign currency translation loss, and no income taxes were allocated to the translation adjustments due to the full valuation allowance position. During the year ended December 31, 2020, the Company recorded foreign currency translation gain and allocated $ 0.7 million income taxes to the translation adjustments. Stock Incentive Plans The Company’s stock-based compensation plans are designed to attract, motivate, retain and reward employees, directors and consultants and align stockholder and employee interests. The Company’s DASAN Zhone Solutions, Inc. 2017 Incentive Award Plan (“2017 Plan”) authorizes the issuance of stock options, restricted stock, restricted stock units, dividend equivalents, stock payment awards, stock appreciation rights, performance bonus awards and other incentive awards. The 2017 Plan authorizes the grant of awards to employees, non-employee directors and consultants of the Company and its subsidiaries. Under the 2017 Plan, stock options may be granted at an exercise price less than, equal to or greater than the fair market value on the date of grant, except that any stock options granted to a 10% stockholder must have an exercise price equal to at least 110 % of the fair market value of the Company’s common stock on the date of grant. The Board of Directors determine the term of each stock option, the option exercise price and the vesting terms. Stock options are generally granted at an exercise price equal to the fair market value on the date of grant, expiring seven to ten years from the date of grant and vesting over a period of four years . The maximum number of shares of the Company’s common stock which may be granted under the 2017 Plan is the sum of (i) 1,174,359 shares, plus (ii) any shares subject to awards granted under the prior plan to the extent such shares become available for issuance under the 2017 Plan pursuant to its terms, plus (iii) any shares subject to an annual increase on each January 1 during the 10 year term of the 2017 Plan equal to the lesser of (x) 4 % of the total shares of the Company’s common stock outstanding (on an as-converted basis) and (y) such smaller amount as may be determined by the Board of Directors in its sole discretion. The annual increase on January 1, 2022 was 1,099,636 shares. In addition, the following annual limitations apply: (i) the maximum aggregate number of shares of the Company’s common stock that may be subject to awards granted to any one participant during a calendar year is 4,000,000 shares; and (ii) the maximum aggregate amount of cash that may be paid to any one participant during any calendar year with respect to awards initially payable in cash is $ 10 million. The number of shares of the Company’s common stock that may be issued or transferred pursuant to awards granted under the 2017 Plan shall not exceed an aggregate of 8,000,000 shares. In 2020, the Compensation Committee of the Company’s Board of Directors approved the grant to Charles Daniel Vogt, the Company’s Chief Executive Officer, of nonqualified stock options to purchase 518,518 shares of the Company’s common stock at an exercise price of $ 10.11 per share, which equaled the closing price of the Company’s common stock on August 1, 2020, the effective date of grant. The vesting commencement date is the grant date of options. The shares subject to the option shall vest on the third anniversary of the vesting commencement date, subject to Mr. Vogt's continuous service as an employee, director or consultant through such vesting date. The grant was a part of the Inducement Option Agreements with Mr. Vogt and was not covered by 2017 Plan. In 2022, certain employees were provided a limited opportunity to exchange two stock options granted under 2017 Plan for one restricted stock unit with the vesting period equal the remaining vesting period for options as of the exchange date. As a result of the transaction, a total of 240,792 stock options were cancelled and 120,396 restricted stock units were granted in exchange. The Company accounted for the exchange as a modification of share-based payments. No incremental expense was recorded in conjunction with the modification. Stock Options Options issued under the Company’s stock incentive plans are exercisable for periods not to exceed ten years , and vest and contain such other terms and conditions as specified in the applicable award document. Options to buy common stock are issued under the 2017 Plan, with exercise prices equal to the closing price of shares of the Company’s common stock on the date of award. The following table sets forth the summary of option activity under the stock option program for the year ended December 31, 2022 (in thousands, except weighted average data): Options Weighted Weighted Aggregate Outstanding at the beginning of the period 2,006 $ 12.83 8.4 $ 8,277 Granted 5 15.95 Exercised ( 137 ) 10.92 Canceled/Forfeited ( 365 ) 17.67 Expired ( 13 ) 13.97 Outstanding at the end of the period 1,496 11.83 7.15 3,281 Vested and exercisable at the end of the period 756 $ 11.07 6.45 $ 2,045 The aggregate intrinsic value represents the total pretax intrinsic value, based on the Company’s closing stock price as of December 31, 2022 of $ 12.68 per share which would have been received by the option holders had the option holders exercised their options as of that date. The aggregate intrinsic value of awards exercised during the years ended December 31, 2022 , 2021, and 2020 were $ 0.5 million, $ 6.2 million, and $ 1.9 million, respectively. The Company has estimated the fair value of stock options on the date of grant using the Black Scholes pricing model, which is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk-free interest rate and expected dividends. The estimated expected term of options granted was determined based on SAB 107 simplified method because the Company does not have adequate historical data for newly issued stock options. Estimated volatility was based on the historical volatility of the Company and the risk-free interest rate was based on the U.S. Treasury yield in effect at the time of grant for the expected life of the options. The Company does not anticipate paying any cash dividends in the foreseeable future, and therefore used an expected dividend yield of zero in the option valuation model. Forfeitures are recognized as they occur. The following table summarizes the weighted average assumptions used to value option grants: Years ended December 31, 2022 2021 2020 Expected term (years) 6.1 6.0 6.2 Volatility 58.9 % 59.5 % 60.5 % Risk free interest rate 1.5 % 1.1 % 0.4 % Dividend yield 0 % 0 % 0 % Weighted average fair value of stock options $ 8.83 $ 9.84 $ 5.40 For the years ended December 31, 2022 , 2021, and 2020, the Company recorded compensation expense related to stock options of $ 3.2 million, $ 3.7 million and $ 3.2 million, respectively. As of December 31, 2022 , there was $ 3.4 million of unrecognized compensation costs which are recognized over a weighted average period of 2.0 years. Restricted Stock Units The following table sets forth the summary of restricted stock units activity under the stock option program for the year ended December 31, 2022 (in thousands, except weighted average data): RSU Weighted Outstanding at the beginning of the period 1,280 $ 16.86 Granted 1,990 15.62 Cancelled/Forfeited ( 197 ) 15.64 Vested and issued ( 400 ) 16.53 Outstanding at the end of the period 2,673 16.08 Vested and unissued at the end of the period 50 15.28 Non-vested at the end of the period 2,623 $ 16.09 The fair value of restricted stock units is determined based on the Company's stock price on the date of grant. Total grant-date fair value of awards granted during the years ended December 31, 2022 , 2021, and 2020 was $ 31.6 million, $ 22.2 million and $ 4.9 million, respectively. Total fair value of awards vested during the years ended December 31, 2022 , 2021, and 2020 was $ 7.4 million, $ 3.1 million and $ 0.5 million, respectively. For the years ended December 31, 2022, 2021, and 2020, the Company recorded compensation expense related to restricted stock units of $ 11.8 million, $ 4.6 million and $ 1.1 million, respectively. As of December 31, 2022 , there was $ 34.0 million of unrecognized compensation costs which are expected to be recognized over a weighted average period of 2.5 years. 2018 Employee Stock Purchase Plan On May 22, 2018, the stockholders of the Company approved the adoption of the DASAN Zhone Solutions, Inc. 2018 Employee Stock Purchase Plan (the “ESPP”). The ESPP replaced the DASAN Zhone Solutions, Inc. 2002 Employee Stock Purchase Plan. The ESPP authorizes the issuance of up to 250,000 shares of the Company’s common stock. In addition, the ESPP provides for an annual increase on the first day of each calendar year beginning on January 1, 2019, and ending on and including January 1, 2028, equal to the lesser of (i) 1 % of the shares outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of shares as may be determined by the Board of Directors in its sole discretion. Notwithstanding the foregoing, the number of shares of stock that may be issued or transferred pursuant to awards under the ESPP may not exceed an aggregate of 2,000,000 shares. These 2,000,000 shares have been registered pursuant to a registration statement on Form S-8 filed with the SEC on November 8, 2018. The purchase price of the shares will be 85 % of the lower of the fair market value of our common stock on (a) the first trading day of the offering period or (b) the final trading day of the offering period, which would be the applicable purchase date. The weighted average assumptions used to value the ESPP shares for the year ended December 31, 2022 included an expected term of 0.5 years, volatility of 54.1 % and a risk free interest rate of 1.4 %. For the years ended December 31, 2022, 2021, and 2020, the Company recorded $ 0.8 million, $ 0.7 million and $ 0.3 million of expense related to the ESPP, respectively. Stock-based Compensation The following table summarizes total stock-based compensation expense for stock options, restricted stock units, and ESPP (in thousands). Years ended December 31, 2022 2021 2020 Cost of revenue $ 801 $ 276 $ 86 Research and product development 4,857 1,074 395 Selling, marketing, general and administrative 10,144 7,640 4,132 $ 15,802 $ 8,990 $ 4,613 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | (10) Net Income (Loss) Per Share The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data): Years ended December 31, 2022 2021 2020 Net income (loss) $ ( 37,431 ) $ ( 34,683 ) $ ( 23,082 ) Weighted average number of shares outstanding: Basic 28,085 26,692 21,588 Effect of dilutive securities: Stock options, restricted stock units and share awards — — — Diluted 28,085 26,692 21,588 Net income (loss) per share: Basic $ ( 1.33 ) $ ( 1.30 ) $ ( 1.07 ) Diluted $ ( 1.33 ) $ ( 1.30 ) $ ( 1.07 ) The following tables set forth potential common stock that is not included in the diluted net income (loss) per share calculation above because their effect would be anti-dilutive for the periods indicated (in thousands): Years ended December 31, 2022 2021 2020 Outstanding stock options 796 914 1,505 Unvested restricted stock units 324 269 20 As of December 31, 2022 , 2021 and 2020, no shares of issued common stock were subject to repurchase. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (11) Income Taxes The geographical breakdown of income (loss) before income taxes is as follows (in thousands): Years ended December 31, 2022 2021 2020 Income (loss) before income taxes - Domestic $ ( 33,496 ) $ ( 6,031 ) $ ( 19,276 ) Income (loss) before income taxes - Foreign ( 1,936 ) ( 25,439 ) ( 305 ) Income (loss) before income taxes $ ( 35,432 ) $ ( 31,470 ) $ ( 19,581 ) The following is a summary of the components of income tax provision (benefit) applicable to income (loss) before income taxes (in thousands): Years ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State 89 29 28 Foreign 1,910 1,779 3,256 Total current tax provision (benefit) $ 1,999 $ 1,808 $ 3,284 Deferred: Federal $ — $ — $ — State — — — Foreign — 1,405 217 Total deferred tax provision (benefit) $ — $ 1,405 $ 217 Total tax provision (benefit) $ 1,999 $ 3,213 $ 3,501 A reconciliation of the expected tax provision (benefit) to the actual tax provision (benefit) is as follows (in thousands): Years ended December 31, 2022 2021 2020 Expected tax provision (benefit) at statutory rate $ ( 7,441 ) $ ( 6,609 ) $ ( 4,112 ) Current state taxes, net of federal benefit 70 23 22 Deferred state taxes, net of federal benefit ( 1,122 ) 304 ( 325 ) Foreign taxes — 166 3,472 Foreign rate differential ( 358 ) ( 1,946 ) ( 65 ) Valuation allowance 2,976 11,341 2,550 Uncertain tax positions 953 2,696 — Global intangible low taxed income 5,690 — 1,241 Share-based compensation 1,862 463 520 Permanent differences 117 ( 2,613 ) 189 Tax credits ( 1,152 ) ( 1,102 ) ( 202 ) Other 404 490 211 Total tax provision (benefit) $ 1,999 $ 3,213 $ 3,501 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows (in thousands): As of December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 20,050 $ 20,755 Tax credit carryforwards 4,805 5,757 Fixed assets and intangible assets 3,062 4,043 Inventory and other reserves 9,491 11,673 Operating lease liability 3,868 3,958 Capitalized research and experimental expenditures 5,674 — Other 6,199 3,600 Gross deferred tax assets 53,149 49,786 Less valuation allowance ( 49,038 ) ( 46,027 ) Deferred tax liabilities: Fixed assets and intangible assets ( 835 ) ( 856 ) Operating lease right-of-use-asset ( 2,886 ) ( 2,903 ) Other assets ( 390 ) — Gross deferred tax liabilities ( 4,111 ) ( 3,759 ) Total net deferred tax assets $ — $ — For the years ended December 31, 2022 and 2021, the net changes in the valuation allowance were an increase of $ 3.0 million and $ 14.0 million, respectively. The increase during the current year is primarily due to capitalized research and experimental expenditures and deferred revenue assumed in conjunction with the ASSIA Acquisition. The Company maintains a valuation allowance on its global net deferred tax assets since it is more likely than not that the net deferred tax assets will not be realized in the foreseeable future. As of December 31, 2022 , the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $ 27.7 million and $ 31.5 million, respectively. Approximately $ 6.6 million of the federal losses expire in 2037 , whereas approximately $ 21.1 million of the losses have an indefinite life. Approximately $ 28.8 million of the state losses begin to expire in various years beginning in 2023 , whereas approximately $ 2.7 million of the loss carryforwards have an indefinite life . As of December 31, 2022 , the Company had German federal and state net operating losses of approximately $ 28.9 million and $ 27.9 million respectively, which do not expire and are carried forward indefinitely, and Canadian net operating losses of approximately $ 5.1 million which may be carried forward for 20 years and begin to expire in 2039 . Pursuant to Sections 382 and 383 of the Internal Revenue Code, or IRC, annual use of the Company's net operating losses and tax credit carryforwards may be limited in the event a cumulative change in ownership of more than 50 % occurs within a three-year period. The Company had an ownership change in September 2016, which has resulted in an annual limitation on the amount of net operating loss and tax credit carryforwards which arose prior to that date that the Company can utilize in a future year. In addition, some of the pre-acquisition NOLs were written off in a prior year due to the limitation. As of December 31, 2022, the Company had U.S. research and development tax credit carryforwards of approximately $ 2.9 million and $ 2.1 million for federal and state purposes, respectively . If not utilized, the federal carryforwards will expire beginning in 2036 . The California credit carryforwards do not expire, the Georgia credit carryforwards will expire beginning in 2026 , and the Texas credit carryforwards will expire beginning in 2040 . In addition, the Company has Canadian research and investment credits of approximately $ 2.8 million and $ 1.8 million, respectively. The Canadian research and investment credits begin to expire in 2031 . The Company does not intend to distribute the earnings from its foreign subsidiaries and has not recorded any deferred tax liability related to such amounts. The Company considers any excess of the amount for financial reporting over the tax basis of our investments in our foreign subsidiaries to be indefinitely reinvested and the determination of any deferred tax liability on this amount is not practicable. The Company is required to inventory, evaluate, and measure all uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities. After reviewing the documentation maintained in support of uncertain tax positions taken in prior years, the Company concluded that it will be unlikely to sustain those positions should they be audited by the relevant tax authorities. Accordingly, the Company increased the reserve for those positions by approximately $ 2.3 million in 2021. As of December 31, 2022 , the Company had gross unrecognized tax benefits of $ 5.1 million, none of which if recognized, would reduce the effective tax rate in a future period, due to the Company's full valuation allowance on U.S. net deferred tax assets. A reconciliation of the beginning and ending unrecognized tax benefit amounts for 2022, 2021, and 2020 are as follows (in thousands): As of December 31, 2022 2021 2020 Balance at beginning of year $ 4,188 $ 1,255 $ 1,036 Increases (decreases) related to prior year’s tax positions ( 31 ) 2,252 — Increases related to current year tax positions 983 681 219 Balance at end of year $ 5,140 $ 4,188 $ 1,255 It is the Company's policy to account for interest and penalties related to uncertain tax positions as interest expense and general administrative expense, respectively in the consolidated statements of comprehensive income (loss). The Company did no t record any interest or penalties during the years ended December 31, 2022, 2021 and 2020. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The open tax years for the major jurisdictions are as follows: Federal 2019 - 2022 California 2018 - 2022 Canada 2018 - 2022 Brazil 2018 - 2022 Germany 2017 - 2022 Japan 2017 - 2022 Korea 2017 - 2022 United Kingdom 2018 - 2022 Vietnam 2012 - 2022 However, due to the fact the Company had net operating losses and credits carried forward in most jurisdictions, certain items attributable to technically closed years are still subject to adjustment by the relevant taxing authority through an adjustment to tax attributes carried forward to open years. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (12) Related Party Transactions Related Party Debt As of December 31, 2022 , the Company had KRW 7.2 billion ($ 5.7 million USD) outstanding of the related party borrowing from DNI. See Note 8 Debt for additional information about the Company’s related party debt. The following table sets forth payment guarantees of certain of the Company's performance obligations as of December 31, 2022 that have been provided by DNI. DNI owns approximately 29.4 % of the outstanding shares of the Company's common stock. The amount guaranteed exceeds the principal amounts of outstanding obligations due to collateral requirements by the banks. Guarantor Amount Guaranteed Description of Obligations Guaranteed Dasan Networks, Inc. $ 3,223 Payment guarantee to Industrial Bank of Korea Dasan Networks, Inc. 1,390 Payment guarantee to Shinhan Bank $ 4,613 Other Related Party Transactions Sales, cost of revenue, research and product development, selling, marketing, general and administrative, interest expense and other expenses to and from relate parties were as follows (in thousands) for the years ended December 31, 2022, 2021, and 2020: For the year ended December 31, 2022 Counterparty Sales Cost of Research Selling, Interest Other Dasan Networks, Inc. $ 1,748 $ 969 $ 91 $ 1,234 $ 55 $ 64 DS Commerce, Inc. — 26 3 29 — — $ 1,748 $ 995 $ 94 $ 1,263 $ 55 $ 64 For the year ended December 31, 2021 Counterparty Sales Cost of Research Selling, Interest Other Dasan Networks, Inc. $ 2,103 $ 1,940 $ 1,019 $ 1,620 $ 132 $ 197 Dasan Invest Co., Ltd. — 30 134 57 — — $ 2,103 $ 1,970 $ 1,153 $ 1,677 $ 132 $ 197 For the year ended December 31, 2020 Counterparty Sales Cost of Research Selling, Interest Other 'Dasan Networks, Inc. $ 4,362 $ 3,843 $ 953 $ 1,579 $ 1,047 $ 355 Dasan Invest Co., Ltd. — 22 100 42 — — $ 4,362 $ 3,865 $ 1,053 $ 1,621 $ 1,047 $ 355 The Company has entered into sales agreements with DNI to sell certain services and finished goods produced by the Company. The Company also has an agreement with DNI in which DNI acts as a sales channel to third party customers. The above transactions are included in sales and cost of revenue on the consolidated statements of comprehensive income (loss). Sales to DNI are recorded net of royalty fees for a sales channel arrangement. DNS Korea, a subsidiary of the Company, has a lease agreement with DNI related to the lease of a warehouse facility. DNS Korea also had a separate office lease agreement with DNI. In the first quarter of 2022, DNI sold the office building to the unrelated third party, and the respective lease was reassigned to the new landlord. Operating lease cost related to DNI leases totaled $ 0.5 million, $ 1.8 million, and $ 1.7 million for the years ended December 31, 2022, 2021, and 2020, respectively. Operating lease expense is allocated between cost of revenue, research and product development, and selling, marketing, general and administrative expenses on the consolidated statements of comprehensive income (loss). As of December 31, 2022 , the right-of-use asset and operating lease liability related to DNI leases were $ 1.7 million. As of December 31, 2021, the right-of-use asset and operating lease liability related to DNI leases were $ 6.4 million. Deposits for the DNI office lease were included in other assets on the consolidated balance sheet as of December 31, 2021. The Company also pays a license fee under the Trademark License Agreement with DNI. The license fee is calculated as 0.4 % of DNS Korea annual sales. For the years ended December 31, 2022 , 2021, and 2020, license related expense were $ 0.7 million, $ 0.7 m illion, and $ 0.6 million, respectively, and were included into selling, marketing, general and administrative expenses on the consolidated statements of comprehensive income (loss). The Company had an agreement with Dasan Invest Co., Ltd. to provide IT services for the Company. The agreement was terminated in the fourth quarter of 2021 and the new agreement was signed with DS Commerce, Inc. Both entities have an affiliation with DZS board members. The respective expense was allocated between cost of revenue, research and product development, and selling, marketing, general and administrative expenses on the consolidated statements of comprehensive income (loss). Interest expense represents interest paid to DNI for the related party debt. Refer to Note 8 Debt for further information. Other expenses to related parties represent expenses to DNI for its payment guarantees relating to the Company's performance obligations. The Company pays DNI a guarantee fee which is calculated as 0.9 % of the guaranteed amount. Refer to the table above for further information about obligations guaranteed by DNI. Balances of Receivables and Payables with Related Parties Balances of receivables and payables arising from sales and purchases of goods and services with related parties as of December 31, 2022 and 2021 were as follows (in thousands): As of December 31, 2022 Counterparty Account Other Other assets Loans Payable Accounts Accrued and other liabilities Dasan Networks, Inc. $ 943 $ 123 $ — $ 5,706 $ 1,019 $ 483 DS Commerce, Inc. — — — — 16 — $ 943 $ 123 $ — $ 5,706 $ 1,035 $ 483 As of December 31, 2021 Counterparty Account Other Other assets Loans Payable Accounts Accrued and other liabilities Dasan Networks, Inc. $ 181 $ 215 $ 691 $ — $ 785 $ — DS Commerce, Inc. — — — — — — $ 181 $ 215 $ 691 $ — $ 785 $ — The related party receivable and payable balances are reflected in the respective balance sheet captions on the consolidated balance sheets as of December 31, 2022 and 2021. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | (13) Leases The Company leases certain properties and buildings (including manufacturing facilities, warehouses, and office spaces) and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists of operating leases which expire at various dates through 2028. The Company determines if an arrangement contains a lease at inception. The Company evaluates each service contract upon inception to determine whether it is, or contains, a lease. Such determination is made by applying judgment in evaluating each service contract within the context of the 5-step decision making process under ASC 842. The key concepts of the 5-step decision making process that the Company evaluated can be summarized as: (1) is there an identified physical asset; (2) does the Company have the right to substantially all the economic benefits from the asset throughout the contract period; (3) does the Company control how and for what purpose the asset is used; (4) does the Company operate the asset; and (5) did the Company design the asset in a way that predetermines how it will be used. Assets and liabilities related to operating leases are included in the consolidated balance sheets as right-of-use assets from operating leases, operating lease liabilities - current and operating lease liabilities - non-current. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Many of the Company’s lease agreements contain renewal options; however, the Company does not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that the Company is reasonably certain of renewing the lease at inception or when a triggering event occurs. Some of the Company’s lease agreements contain rent escalation clauses, rent holidays, capital improvement funding or other lease concessions. The Company recognizes minimum rental expense on a straight-line basis based on the fixed components of a lease arrangement. The Company amortizes this expense over the term of the lease beginning with the date of initial possession, which is the date lessor makes an underlying asset available for use. Variable lease components represent amounts that are not fixed in nature, are not tied to an index or rate, and are recognized as incurred. In determining its right-of-use assets and lease liabilities, the Company applies a discount rate to the minimum lease payments within each lease agreement. ASC 842 requires the Company to use the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company determines the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region. The components of lease expense were as follows for the years ended December 31, 2022, 2021 and 2020 (in thousands): Years ended December 31, 2022 2021 2020 Operating lease cost $ 4,152 $ 4,201 $ 5,393 Short-term lease cost 152 1,302 264 Total net lease cost $ 4,304 $ 5,503 $ 5,657 Short-term lease costs related to the short-term rent of office spaces and office equipment leases. Variable lease cost was no t significant for the years ended December 31, 2022, 2021, and 2020. During the year ended December 31, 2022 , the Company recorded $ 0.8 million of impairment charges on the right-of-use assets related to the office lease in Redwood City, California, acquired in conjunction with ASSIA Acquisition. Following the acquisition, the Company made a decision to vacate the space in Redwood City and to adopt a remote work policy in the region. During the year ended December 31, 2021, the Company recorded $ 4.2 million of impairment charges on the right-of-use assets, including $ 2.5 million related to the restructuring in Hanover, Germany and $ 1.7 million related to the headquarters relocation to Plano, Texas. These charges were included into restructuring and other charges and impairment of long-lived assets, respectively, on the consolidated statements of comprehensive income (loss). Supplemental cash flow information related to the Company’s operating leases was as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands): Years ended December 31, 2022 2021 2020 Operating cash outflows from operating leases $ 5,184 $ 5,936 $ 5,307 Right-of-use assets obtained in exchange for operating lease obligations 5,010 2,783 1,405 The following table presents the lease balances within the Company’s consolidated balance sheets, weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases as of December 31, 2022 and 2021 (dollars in thousands): As of December 31, 2022 2021 Assets: Right-of-use assets from operating leases $ 12,606 $ 12,640 Liabilities: Operating lease liabilities - current $ 4,834 $ 4,097 Operating lease liabilities - non-current 11,417 12,103 Total operating lease liabilities $ 16,251 $ 16,200 Weighted average remaining lease term 3.7 years 4.2 years Weighted average discount rate 5.3 % 5.6 % The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2022 (in thousands): 2023 $ 5,129 2024 4,965 2025 3,491 2026 2,131 2027 1,018 Thereafter 685 Total operating lease payments 17,419 Less: imputed interest ( 1,168 ) Total operating lease liabilities $ 16,251 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (14) Commitments and Contingencies Performance Bonds In the normal course of operations, from time to time, the Company arranges for the issuance of various types of performance guarantees, such as standby letter of credits or surety bonds. These instruments are arrangements under which the financial institution or surety provides a financial guarantee that the Company will perform in accordance with contractual or legal obligations. As of December 31, 2022 , the Company had $ 11.8 million of performance guarantees in the form of bank guarantees or surety bonds guaranteed by third parties. Purchase Commitments As of December 31, 2022 , we had $ 112.6 million in outstanding purchase order commitments to our contract manufacturers and component suppliers for inventory. In certain instances, we are permitted to cancel, reschedule or adjust these orders. Consequently, only a portion of this amount relates to firm, non-cancelable and unconditional obligations. Trade Compliance Matter During the first quarter of 2022, the Company received a notice letter from the Office of the Commissioner of Customs of the India Department of Revenue (the “Notice”) claiming the Company had mis-declared and wrongly classified certain products imported to India by the Company at the time of clearance of customs. The Notice claims that due to such mis-declaration and wrong classification of the imported products, the Company and its contract manufacturer in India underpaid duties approximating $ 3.9 million related to such products. The Company intends to vigorously defend itself in this matter. As we have not yet received the full contents of the Notice, we are unable to estimate a potential loss related to this matter, if any, which could range up to the full amount of the unpaid duties, plus penalties and interest. In addition to the Notice discussed above, from time to time, the Company is subject to various legal proceedings, claims and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, the Company records an accrual for legal contingencies that it has determined to be probable to the extent that the amount of the loss can be reasonably estimated. The Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its consolidated financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the results of operations and cash flows of the reporting period in which the ruling occurs, or future periods. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | (15) Employee Benefit Plans Defined Contribution Plans The Company maintains a 401(k) plan for its employees in the United States whereby eligible employees may contribute up to a specified percentage of their earnings, on a pretax basis, subject to the maximum amount permitted by the Internal Revenue Code. Under the 401(k) plan, the Company made discretionary contributions to the plan in 2022 and 2021. The Company made no discretionary contributions to the plan in 2020. For the years ended December 31, 2022 and 2021, the Company recorded an expense of $ 0.9 million and $ 0.5 million, respectively, compared to no expense for the year ended December 31, 2020. The Company maintains a defined contribution plan for its employees in South Korea. Under the defined contribution plan, the Company contributes the equivalent of 8.3 % of an employee's gross salary into the plan. For the year ended December 31, 2022 , the Company recorded an expense of $ 1.2 million for the plan, compared to $ 1.3 million recorded for each of the years ended December 31, 2021 and 2020. Defined Benefit Plans The Company sponsors defined benefit plans for its employees in Germany and Japan. Defined benefit plans provide pension benefits based on compensation and years of service. The Germany plans were frozen as of September 30, 2003 and have not been offered to new employees after that date. The following provides a reconciliation of the changes in benefit obligation, and the funded status at the end of the years (in thousand): Years ended December 31, 2022 2021 2020 Benefit obligation at beginning of year $ 16,527 $ 20,052 $ 17,671 Service cost 100 115 95 Interest cost 146 82 191 Benefits paid ( 572 ) ( 592 ) ( 568 ) Actuarial (gain) loss ( 4,278 ) ( 1,606 ) 1,002 Foreign currency exchange rate change ( 902 ) ( 1,524 ) 1,661 Benefit obligation at end of year 11,021 16,527 20,052 Underfunded status at end of year $ 11,021 $ 16,527 $ 20,052 The Company has recorded the 2022 and 2021 underfunded status as a long-term liability on the consolidated balance sheets. The Company holds pension insurance contracts, with the Company as beneficiary, in the amount of $ 2.5 million and $ 2.9 million as of December 31, 2022 and 2021, respectively, related to individuals under the pension plans. The Company records these insurance contracts based on their cash surrender value at the balance sheet dates. These insurance contracts are classified as other assets on the consolidated balance sheet. The Company intends to use any proceeds from these policies to fund the pension plans. However, since the Company is the beneficiary on these policies, these assets have not been designated pension plan assets. The net periodic benefit cost related to the plans consisted of the following components (in thousands): Years ended December 31, 2022 2021 2020 Service Cost $ 100 $ 115 $ 95 Interest Cost 146 82 170 Net amortization of net gain (loss) — 107 21 Net periodic benefit cost $ 246 $ 304 $ 286 The service cost component of net benefit cost is presented within cost of revenue or selling, marketing, general and administrative expense on the accompanying consolidated statements of comprehensive income (loss), in accordance with where compensation cost for the related associate is reported. All other components of net benefit cost, including interest cost and net amortization noted above, are presented within other income/expense, net in the accompanying consolidated statements of comprehensive income (loss). The following table presents changes in benefit obligations recognized net of tax in other comprehensive income (in thousands): Years ended December 31, 2022 2021 2020 Amortization of net (gain) loss $ — $ ( 107 ) $ ( 21 ) Actuarial (gain) loss in the current period ( 4,278 ) ( 1,606 ) 1,002 Net change during the period $ ( 4,278 ) $ ( 1,713 ) $ 981 The increase in the actuarial gain during the year ended December 31, 2022, compared to the year ended December 31, 2021 was mainly due to the increase in the discount rate, resulting from an increase in the implicit rate of high-quality fixed income investments. The estimated net loss and prior service cost for the plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is not significant. The Company expects to make no contributions to the plans in 2022. The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the plans are as follows: Years ended December 31, 2022 2021 2020 Discount rate 3.7 % 1.0 % 0.4 % Rate of compensation increase 2.0 % 1.7 % 1.7 % The following benefit payments, which are funded by the Company, are expected to be paid (in thousands): 2023 $ 707 2024 704 2025 730 2026 720 2027 743 2028 - 2031 $ 3,212 |
Enterprise-Wide Information
Enterprise-Wide Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Enterprise-Wide Information | (16) Enterprise-Wide Information The Company is a global provider of access and optical networking infrastructure and cloud software solutions deployed by advanced Tier 1, national and regional service providers and enterprise customers. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the Company unit level. Accordingly, the Company is considered to be in a single operating segment. The Company’s chief operating decision maker is the Company’s Chief Executive Officer, who reviews financial information presented on a consolidated basis accompanied with disaggregated revenues by geographic region for purposes of making operating decisions and assessing financial performance. The Company attributes revenue from customers to individual countries based on location shipped. Refer to Note 1(f) Revenue Recognition for the required disclosures on geographical concentrations and revenues by source. The Company's property, plant and equipment, net of accumulated depreciation, were located in the following geographical areas (in thousands) as of December 31, 2022 and 2021: As of December 31, 2022 2021 United States $ 5,725 $ 6,105 Korea 2,706 2,367 Japan 644 799 Canada 157 280 Germany 110 210 Other 136 81 $ 9,478 $ 9,842 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | (b) Basis of Presentation The consolidated financial statements are prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. Certain prior-year amounts have been reclassified to conform to the current-year presentation. |
Related Party Transactions | (c) Related Party Transactions The financial statements include disclosures of material related party transactions. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements are not required to be disclosed. As of December 31, 2022 , DASAN Networks, Inc. (“DNI”) owned approximately 29.4 % of the outstanding shares of the Company's common stock. See Note 12 Related Party Transactions for additional information about related party transactions. |
Risks and Uncertainties | (d) Risks and Uncertainties The accompanying consolidated financial statements have been prepared in con(d) Risks and Uncertaintiesformity with U.S. GAAP, assuming the Company will continue as a going concern. The Company had a net loss of $ 37.4 million, $ 34.7 million, and $ 23.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022 , the Company had an accumulated deficit of $ 124.8 million and working capital of $ 86.5 million. As of December 31, 2022 , the Company had $ 38.5 million in cash and cash equivalents, which included $ 13.6 million in cash balances held by its international subsidiaries. Based on the Company's current plans and current business conditions, the Company believes that its existing cash, cash equivalents and available credit facility will be sufficient to satisfy its anticipated cash requirements for at least the next 12 months from the date of this Annual Report on Form 10-K. The COVID-19 pandemic continued to adversely affect significant portions of our business and our financial condition and results of operations in 2022. The emergence of the Omicron variant in late 2021 with a resulting increase in COVID cases in 2022 resulted in re-implementation of various measures, shutdowns, including travel bans and restrictions, limitations on public and private gatherings, business and port closures or operating restrictions, social distancing, and shelter-in-place orders. The health effects of the pandemic and the above measures taken in response thereto have had an effect on the global economy in general and have materially impacted and will likely continue to impact the Company’s financial condition, results of operations and cash flows. Given the ongoing and dynamic nature of the virus and its variants, and the worldwide response related thereto, it is difficult to predict the full impact of the COVID-19 pandemic on our business. We have experienced and continue to experience disruptions in our supply chain due to the pandemic, which has also impacted and may adversely impact our operations and the operations of some of our key suppliers. Supply chain pricing, freight and logistics costs, product and component availability, and extended lead-times became a challenge in 2021 and continue into 2022 as the world economy recovers from the COVID-19 pandemic. As we continue to incur elevated costs for components and expedite fees, our supply chain and operations teams continue to focus on managing through a constrained environment, thereby enabling DZS to maximize shipments despite elongated lead times. We remain cautious about continued supply chain headwinds that challenge the industry and anticipate a constrained supply chain environment to persist throughout 2023. We conduct significant business in South Korea, Japan, Vietnam, India, Spain, and Canada, as well as in other countries in Europe, Asia-Pacific, Middle East and Latin America, all of which subject us to foreign currency exchange rate risk. The local currencies of our significant foreign subsidiaries are the South Korean Won ("KRW"), Japanese Yen ("JPY"), Euro ("EUR), and Pound Sterling ("GBP"). Revenues and operating expenses are typically denominated in the local currency of each country and result from transactions by our operations in these countries. However, a significant portion of our international cost of sales is denominated in the U.S. Dollar (“USD”). During 2022, the USD appreciated significantly against the KRW, JPY, EUR and GBP which reduced the translated revenues, cost of sales and operating expenses transacted in local currencies, but not the USD based cost of sales, resulting in compressed margins and lower profitability. Late in 2022, exchange rates for these currencies returned to rates more comparable to historical rates. As of December 31, 2022, the Company's debt obligation was $ 24.1 million, net of unamortized issuance costs of $ 0.3 million and of which $ 1.3 million is scheduled for payment in 2023. While we believe that we are likely to achieve results of operations which would ensure loan covenant compliance, due to the potential impact of the COVID-19 pandemic, supply chain disruptions and foreign exchange fluctuations, there is a risk of non-compliance in the next 12 months and, accordingly, we have classified the entire amount as a current liability. While the borrowings under the term loan are currently classified as a current liability, the Company believes that it will maintain liquidity in the next 12 months after the balance sheet date to support its operations. |
Concentration of Risk | Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, accounts receivable and contract assets. Cash and cash equivalents consist principally of financial deposits and money market accounts that are principally held with various domestic and international financial institutions with high credit standing. The Company’s customers include competitive and incumbent local exchange carriers, competitive access providers, internet service providers, wireless carriers and resellers serving these markets. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts based upon the expected collectability of accounts receivable. For the year ended December 31, 2022, one customer represented 13 % of net revenue. For the year ended December 31, 2021, two customers represented 19 % and 12 % of net revenue, respectively. For the year ended December 31, 2020, two customers represented 14 % and 13 % of net revenue, respectively. As of December 31, 2022 , no customer represented more than 10% of net accounts receivable. As of December 31, 2021, two customers represented 26 % and 10 % of net accounts receivable, respectively. As of December 31, 2022 , and December 31, 2021, net accounts receivable from customers in countries other than the United States represented 86 % and 79 %, respectively. In 2017, the Company entered into an agreement with a customer in India to supply product for a state sponsored broadband project. The Company substantially completed its obligations under the agreement in 2018. The Company billed the customer, which is a state government sponsored entity, approximately $ 59.0 million and collected payments of approximately $ 41.7 million by December 31, 2020. In late March 2021, the customer’s state government parent experienced difficulty passing a budget impacting the ability of the customer to make remaining agreed-upon payments to us. In light of this development, the Company recorded an allowance that covered the entire balance unpaid by the customer. Subsequent to March 2021, the Company recovered approximately $ 2.4 million of accounts receivable related to the customer. As of December 31, 2022 the Company has a recorded allowance for doubtful accounts of $ 13.1 million related to this receivable. The Company will continue to pursue collection of the entire outstanding balance and any amounts collected will be recognized in the period which they are received. In the event the Company’s efforts to collect from this customer prove unsuccessful, DZS may seek payment through other means, including through legal action. |
Use of Estimates | (e) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. |
Revenue Recognition | (f) Revenue Recognition Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue primarily from sales of products and services, including, extended warranty service, software and customer support. Revenue from product sales is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery, dependent upon the terms of the underlying contract. Many of the Company’s arrangements include customer acceptance provisions which the Company typically considers a formality. In situations when the customer acceptance terms are more than a formality, transfer of control usually occurs upon obtaining the signed acceptance certificate from the customer. In those instances where transfer of control occurs prior to obtaining the signed acceptance certificate, the Company considers a number of factors, including successful completion of customer testing to demonstrate that the delivered products meet all the acceptance criteria specified in the arrangement, its experience with the customer and its experience with other contracts for similar products. Revenue from services is generally recognized over time on a ratable basis over the contract term, using an output measure of progress, as the contracts usually provide the customer equal benefit throughout the contract period. The Company typically invoices customers for support contracts in advance, for periods ranging from one to five years . Transaction price is calculated as selling price net of variable consideration. Sales to certain distributors are made under arrangements which provide the distributors with volume discounts, price adjustments, and other allowances under certain circumstances. These adjustments and allowances are accounted for as variable consideration. To estimate variable consideration, the Company analyzes historical data and current economic trends, and changes in customer demand for the Company's products, among other factors. Historically, variable consideration has not been a significant component of the Company’s contracts with customers. For contracts with customers that contain multiple performance obligations, the Company accounts for the promised performance obligations separately as individual performance obligations if they are distinct. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, including the degree of interrelation and interdependence between obligations and whether or not the good or service significantly modifies or transforms another good or service in the contract. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for products are determined using either an adjusted market assessment or expected cost-plus margin . For customer support and extended warranty services, standalone selling price is primarily based on the prices charged to customers, when sold separately. Unsatisfied and partially unsatisfied performance obligations as of the end of the reporting period primarily consist of products and services for which customer purchase orders have been accepted and that are in the process of being delivered. The Company records contract assets when it satisfies a performance obligation but does not have an unconditional right to consideration and records accounts receivable when it satisfies a performance obligation and has an unconditional right to consideration. The Company records contract liabilities when cash payments (or unconditional rights to receive cash) are received in advance of fulfilling its performance obligations. The Company’s payment terms vary by the type and location of its customer and the products or services offered. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. Other related policies and revenue information Warranties Products sold to customers include standard warranties, typically for one year , covering physical operation and software bug fixes and minor updates such that the product continues to function according to published technical specifications. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified. Therefore, standard warranties are not considered separate performance obligations. Instead, the expected cost of warranty is accrued as expense as discussed below. Optional extended warranties, typically between one and three years , and for up to five years , are sold with certain products and include additional support services. The transaction price for extended warranties is accounted for as service revenue and recognized ratably over the life of the contract. The Company records estimated costs related to standard warranties upon product shipment or upon identification of a specific product failure. The Company recognizes estimated warranty costs when it is probable that a liability has been incurred and the amount of loss is reasonably estimable. The estimates are based upon historical and projected product failure and claim rates, historical costs incurred in correcting product failures and information available related to any specifically identified product failures. Significant judgment is required in estimating costs associated with warranty activities and the Company's estimates are limited to information available to the Company at the time of such estimates. In some cases, such as when a specific product failure is first identified or a new product is introduced, the Company may initially have limited information and limited historical failure and claim rates upon which to base its estimates, and such estimates may require revision in future periods. The recorded amount is adjusted from time to time for specifically identified warranty exposure. Contract Costs The Company recognizes an asset for certain costs to fulfill a contract if it is determined that such costs relate directly to a contract or anticipated contracts, can be determined to generate or enhance resources that will be used in satisfying related performance obligations in the future, and are expected to be recovered. Such costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods to which the asset relates. Contract costs primarily consist of sales commissions that are amortized as sales and marketing expense. Financing The Company applies the practical expedient not to adjust the promised amount of consideration for the effects of a financing component if the Company expects, at contract inception, that the period between when the Company transfers a good or service to the customer and when the customer pays for the good or service will be one year or less. During the years ended December 31, 2022, 2021, and 2020, such financing components were not significant. Shipping and Handling The Company has elected to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost rather than as an additional promised service. As a result, the Company accrues the costs of shipping and handling when the related revenue is recognized . Unsatisfied Performance Obligations The majority of the Company's performance obligations in its contracts with customers relate to contracts with duration of less than one year. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less, based on the elected practical expedients. The transaction price allocated to noncancellable unsatisfied performance obligations included in contracts with duration of more than 12 months is reflected in contract liabilities – non-current on the consolidated balance sheets. Disaggregation of Revenue The following table presents the revenues by source (in thousands): Years ended December 31, 2022 2021 2020 Products $ 335,258 $ 330,093 $ 280,988 Services and software 40,433 20,113 19,652 Total $ 375,691 $ 350,206 $ 300,640 The following table present revenues by geographical region (in thousands): Years ended December 31, 2022 2021 2020 Americas $ 107,392 $ 101,473 $ 61,900 Europe, Middle East, Africa 79,286 70,046 64,580 Asia 189,013 178,687 174,160 Total $ 375,691 $ 350,206 $ 300,640 |
Allowances for Doubtful Accounts and Sales Returns | (g) Allowances for Doubtful Accounts and Sales Returns The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make payments for amounts owed to the Company. The allowance for doubtful accounts is recorded as an expense under selling, marketing, general and administrative expenses. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts based upon the expected collectability of accounts receivable using historical loss rates adjusted for customer-specific factors and current economic conditions. The Company determines historical loss rates on a rational and systematic basis. The Company performs periodic assessments of its customers’ liquidity and financial condition through analysis of information obtained from credit rating agencies, financial statement review and historical and current collection trends. Though the allowance for doubtful accounts at each balance sheet date represents the Company’s best estimate at that point in time, an increase or decrease to the allowance for doubtful accounts may be required in the future based on updated historical loss rates, customer-specific factors and economic conditions or if previously reserved balances have been collected. Activity under the Company’s allowance for doubtful accounts is comprised as follows (in thousands): Years ended December 31, 2022 2021 2020 Balance at beginning of year $ 17,735 $ 3,954 $ 393 Charged to expense, net of recoveries ( 229 ) 14,491 3,833 Utilization and write off ( 117 ) ( 126 ) ( 331 ) Cumulative effect of ASC 326 adoption 401 — — Foreign exchange impact ( 1,606 ) ( 584 ) 59 Balance at end of year $ 16,184 $ 17,735 $ 3,954 The Company records an allowance for sales returns for estimated future product returns related to current period product revenue. The allowance for sales returns is recorded as a reduction of revenue and an increase to accrued and other liabilities. The Company bases its allowance for sales returns on periodic assessments of historical trends in product return rates and current approved returned products. If the actual future returns were to deviate from the historical data on which the reserve had been established, the Company’s future revenue could be adversely affected. Activity under the Company’s allowance for sales returns is comprised as follows (in thousands): Years ended December 31, 2022 2021 2020 Balance at beginning of year $ 873 $ 390 $ 343 Charged to revenue 2,556 1,132 1,303 Utilization and write off ( 2,279 ) ( 649 ) ( 1,256 ) Balance at end of year $ 1,150 $ 873 $ 390 |
Inventories | (h) Inventories Inventories are stated at the lower of cost or net realizable value, with cost being computed based on an adjusted standard basis, which approximates actual cost on an average or first-in, first-out basis. In assessing the net realizable value of inventories, the Company is required to make judgments as to future demand requirements and compare these with the current or committed inventory levels. Once inventory has been written down to its estimated net realizable value, its carrying value cannot be increased due to subsequent changes in demand. To the extent that a severe decline in forecasted demand occurs, or the Company experiences a higher incidence of inventory obsolescence due to rapidly changing technology and customer requirements, the Company may incur significant expenses for excess and obsolete inventory. The Company also evaluates the terms of its agreements with its suppliers and establishes accruals for estimated losses on adverse purchase commitments as necessary, applying the same lower of cost or net realizable value approach that is used to value inventory. |
Foreign Currency Translation | (i) Foreign Currency Translation For operations outside the United States, the Company translates assets and liabilities of foreign subsidiaries, whose functional currency is the applicable local currency, at end of period exchange rates. Revenues and expenses are translated at periodic average rates. The adjustment resulting from translating the financial statements of such foreign subsidiaries is included in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity. Realized and unrealized gains and losses on foreign currency transactions are included in other income (expense) in the accompanying consolidated statements of comprehensive income (loss). Our primary exposure to foreign currency exchange rate movements is with our Korea subsidiary, that has a Korean Won functional currency, our Japan subsidiary, that has a Japanese Yen functional currency, and our Germany subsidiary, that has a Euro functional currency. |
Comprehensive Income (Loss) | (j) Comprehensive Income (Loss) There have been no material items reclassified out of accumulated other comprehensive income (loss) and into net income (loss). The Company’s other comprehensive income (loss) for the years ended December 31, 2022 , 2021, and 2020 is primarily comprised of foreign currency translation gains and losses and actuarial gains and losses from the Company’s pension liabilities. |
Property, Plant and Equipment | (k) Property, Plant and Equipment Property, plant, and equipment are stated at cost, less accumulated depreciation, and are depreciated using the straight-line method over the estimated useful life of each asset. The useful life of each asset category is as follows: Asset Category Useful Life Furniture and fixtures 3 to 4 years Machinery and equipment 2 to 10 years Computers and software 3 to 5 years Leasehold improvements Shorter of remaining lease term Upon retirement or sale, the cost and related accumulated depreciation of the asset are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. |
Long-Lived Assets | (l) Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Factors the Company considers important which could trigger an impairment review, include, but are not limited to, significant changes in the manner of use the assets, significant changes in the strategy for the Company's overall business or significant negative economic trends. If this evaluation indicates that the value of an intangible asset may be impaired an assessment of the recoverability of the net carrying value of the asset over its remaining useful life is made. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future net undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future net undiscounted cash flows, an impairment expense is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. If this assessment indicates that the cost of an intangible asset is not recoverable, based on the estimated undiscounted future cash flows or other comparable market valuations of the entity or technology acquired over the remaining amortization period, the net carrying value of the related intangible asset will be reduced to fair value and the remaining amortization period may be adjusted. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. Any assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. |
Goodwill and Other Intangible Assets | (m) Goodwill and Other Intangible Assets Goodwill and other acquisition-related intangible assets not subject to amortization are tested annually for impairment and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. The quantitative goodwill impairment test is a two-step process with step one requiring the comparison of the reporting unit's estimated fair value with the carrying amount of its net assets. If necessary, step two of the impairment test determines the amount of goodwill impairment to be recorded when the reporting unit's recorded net assets exceed its fair value. The Company performs its annual impairment testing as of October 31. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. |
Business Combinations | (n) Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets and certain tangible assets such as inventory. Critical estimates in valuing certain tangible and intangible assets include but are not limited to future expected cash flows from the underlying assets and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. |
Stock-Based Compensation | (o) Stock-Based Compensation Stock-based compensation cost is measured at the grant date of the awards based on the estimated fair value of the awards. The Company determines the fair value of restricted stock units based on the Company’s stock price on the date of grant. The Company uses the Black Scholes model to estimate the fair value of options, which is affected by the Company's stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company's expected stock price volatility over the expected term of the awards, risk-free interest rates and expected dividends. The expected stock price volatility is based on the weighted average of the historical volatility of the Company's common stock over the most recent period commensurate with the estimated expected life of the Company's stock options. The expected term of options granted is determined based on SAB 107 simplified method. Risk-free interest rates reflect the yield on zero-coupon United States Treasury securities. The Company amortizes the value of the stock-based compensation to expense using the straight-line method. The value of the award is recognized as expense over the requisite service periods in the Company’s consolidated statements of comprehensive income (loss). The Company accounts for forfeitures as they occur. |
Income Taxes | (p) Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and the income tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company does not recognize a tax benefit unless it concludes that it is more likely than not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position. If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that, in the Company’s judgment, is greater than 50 percent likely to be realized. The Company records interest and penalties related to uncertain tax positions in interest expense and in general and administrative expense, respectively. |
Net Income (Loss) per Share | (q) Net Income (Loss) per Share Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss) gives effect to common stock equivalents; however, potential common equivalent shares are excluded if their effect is antidilutive. Potential common stock equivalent shares are composed of restricted stock units, unvested restricted shares and incremental shares of common stock issuable upon the exercise of stock options. |
Research and Development Costs | (r) Research and Development Costs ASC 985-20 requires the capitalization of certain software development costs that are incurred subsequent to the date technological feasibility is established and prior to the date the product is generally available for sale. DZS defines technological feasibility as being attained at the time a working model is completed. There is generally no significant passage of time between achievement of technological feasibility and the availability of our software for general release, and software development costs qualifying for capitalization have been insignificant. Accordingly, DZS has not capitalized any software development costs. The Company expenses all software development costs as incurred and includes such amounts within research and development expense on the consolidated statements of comprehensive income (loss). |
Cloud Computing Costs | (s) Cloud Computing Costs The Company capitalizes certain implementation costs related to the development stage of cloud computing arrangements. Costs related to the preliminary project stage and post-implementation phase are expensed as incurred. Cloud computing costs capitalized are included into other assets on the consolidated balance sheets. Capitalized cloud computing costs are amortized using the straight-line amortization method over the estimated term of hosting arrangements. |
Cash and Cash Equivalents | (t) Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments (if any) with original maturities of less than three months. |
Leases | (u) Leases The Company determines if an arrangement is a lease at inception. Payments under the Company’s lease arrangements are primarily fixed. The Company accounts for lease components and non-lease components as a single lease component. Variable lease payment a mounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the right-of-use assets or lease liabilities. The Company has real estate leases which require payments for common area maintenance, which are expensed as incurred as variable lease costs and hence are not included in the lease payments used to calculate lease liability. Other real estate leases contain fixed payments for common area maintenance, which are considered part of the lease payment and included in the right-of-use assets and lease liabilities. Lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in our leases is not readily determinable. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. The Company’s lease terms include periods under options to extend the lease when it is reasonably certain that we will exercise that option. |
Recent Accounting Pronouncements | (v) Recent Accounting Pronouncements In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires the Company to apply ASC 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. Before the update such balances were measured and recognized at fair value on the acquisition date. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods. The Company adopted these requirements prospectively, effective on the first day of the second quarter of year 2022. There was no material impact on our consolidated financial statements on the adoption date. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, and ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provided additional implementation guidance on the previously issued ASU. The Company adopted the updated guidance on January 1, 2022 , utilizing the modified retrospective transition method and recorded a cumulative-effect adjustment of $ 0.4 million to retained earnings. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Revenues by Source | The following table presents the revenues by source (in thousands): Years ended December 31, 2022 2021 2020 Products $ 335,258 $ 330,093 $ 280,988 Services and software 40,433 20,113 19,652 Total $ 375,691 $ 350,206 $ 300,640 |
Schedule of Information Revenues by Geographical Region | The following table present revenues by geographical region (in thousands): Years ended December 31, 2022 2021 2020 Americas $ 107,392 $ 101,473 $ 61,900 Europe, Middle East, Africa 79,286 70,046 64,580 Asia 189,013 178,687 174,160 Total $ 375,691 $ 350,206 $ 300,640 |
Schedule of Allowances for Doubtful Accounts | Activity under the Company’s allowance for doubtful accounts is comprised as follows (in thousands): Years ended December 31, 2022 2021 2020 Balance at beginning of year $ 17,735 $ 3,954 $ 393 Charged to expense, net of recoveries ( 229 ) 14,491 3,833 Utilization and write off ( 117 ) ( 126 ) ( 331 ) Cumulative effect of ASC 326 adoption 401 — — Foreign exchange impact ( 1,606 ) ( 584 ) 59 Balance at end of year $ 16,184 $ 17,735 $ 3,954 |
Schedule of Allowance for Sales Returns | Activity under the Company’s allowance for sales returns is comprised as follows (in thousands): Years ended December 31, 2022 2021 2020 Balance at beginning of year $ 873 $ 390 $ 343 Charged to revenue 2,556 1,132 1,303 Utilization and write off ( 2,279 ) ( 649 ) ( 1,256 ) Balance at end of year $ 1,150 $ 873 $ 390 |
Schedule of Property, Plant and Equipment, Net | Property, plant, and equipment are stated at cost, less accumulated depreciation, and are depreciated using the straight-line method over the estimated useful life of each asset. The useful life of each asset category is as follows: Asset Category Useful Life Furniture and fixtures 3 to 4 years Machinery and equipment 2 to 10 years Computers and software 3 to 5 years Leasehold improvements Shorter of remaining lease term Property, plant and equipment As of December 31, 2022 2021 Machinery and equipment $ 17,214 $ 14,278 Leasehold improvements 5,683 5,219 Computers and software 4,713 3,217 Furniture and fixtures 1,748 1,771 Construction in progress and other 1,264 2,937 30,622 27,422 Less: accumulated depreciation and amortization ( 21,062 ) ( 17,394 ) Less: government grants ( 82 ) ( 186 ) Total property, plant and equipment, net $ 9,478 $ 9,842 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed | Provisional allocation of purchase consideration Cash and cash equivalents $ 203 Accounts receivable 2,322 Other assets 407 Right-of-use assets 2,172 Property, plant and equipment 232 Intangible assets 30,200 Accounts payable ( 75 ) Contract liabilities ( 19,550 ) Operating lease liabilities ( 2,612 ) Accrued and other liabilities ( 756 ) Goodwill 13,807 Total purchase consideration $ 26,350 |
Schedule of Estimated Fair Value and Useful Lives of Identifiable Intangible Assets | The following table represents the preliminary estimated fair value and useful lives of identifiable intangible assets acquired (estimated fair value in thousands): Estimated Estimated fair value useful life Intangible assets acquired Customer relationships $ 18,600 15 years Customer backlog 5,100 10 years Developed technology 6,200 5 - 7 years Tradenames 300 10 years Total intangible assets $ 30,200 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Reconciliation of Level 3 Contingent Liability | Year ended December 31, 2022 2021 Balance at the beginning of the period $ 2,121 $ — Initial fair value of contingent liability — 1,897 Cash payments ( 558 ) — Net change in fair value ( 407 ) 224 Balance at the end of the period $ 1,156 $ 2,121 |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Inventories | Inventories As of December 31, 2022 2021 Raw materials $ 37,354 $ 34,512 Work in process 1,050 1,427 Finished goods 40,109 20,954 Total inventories $ 78,513 $ 56,893 |
Schedule of Property, Plant and Equipment, Net | Property, plant, and equipment are stated at cost, less accumulated depreciation, and are depreciated using the straight-line method over the estimated useful life of each asset. The useful life of each asset category is as follows: Asset Category Useful Life Furniture and fixtures 3 to 4 years Machinery and equipment 2 to 10 years Computers and software 3 to 5 years Leasehold improvements Shorter of remaining lease term Property, plant and equipment As of December 31, 2022 2021 Machinery and equipment $ 17,214 $ 14,278 Leasehold improvements 5,683 5,219 Computers and software 4,713 3,217 Furniture and fixtures 1,748 1,771 Construction in progress and other 1,264 2,937 30,622 27,422 Less: accumulated depreciation and amortization ( 21,062 ) ( 17,394 ) Less: government grants ( 82 ) ( 186 ) Total property, plant and equipment, net $ 9,478 $ 9,842 |
Schedule of Accrued and Other Liabilities | Accrued and other liabilities As of December 31, 2022 2021 Accrued taxes payable $ 6,214 $ 2,306 Accrued compensation 8,897 7,230 Accrued acquisition holdback 2,500 321 Accrued warranty 1,896 1,981 Accrued sales returns 1,150 873 Other accrued expenses 6,902 3,321 $ 27,559 $ 16,032 |
Summary of Product Warranty Liability | The following table summarizes the activity related to the product warranty liability: Years ended December 31, 2022 2021 2020 Balance at the beginning of the period $ 1,981 $ 1,522 $ 1,611 Charged to cost of revenue 656 798 1,072 Claims and settlements ( 704 ) ( 404 ) ( 1,189 ) Foreign exchange impact ( 37 ) 65 28 Balance at the end of the period $ 1,896 $ 1,981 $ 1,522 |
Summary of Contract Assets and Contract Liabilities Related to Contracts with Customers | The opening and closing balances of current and long-term contract assets and contract liabilities related to contracts with customers are as follows: Contract Contract December 31, 2021 $ 2,184 $ 9,135 December 31, 2022 576 29,641 Increase (decrease) $ ( 1,608 ) $ 20,506 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table summarizes the activity related to Goodwill (in thousands): As of December 31, 2022 2021 Balance at the beginning of the period, gross $ 7,148 $ 4,980 Accumulated impairment at the beginning of the period ( 1,003 ) ( 1,003 ) Goodwill from acquisitions 13,807 2,168 Foreign exchange impact — — Balance at the end of the period $ 19,952 $ 6,145 |
Schedule of Intangible Assets | Intangible assets consisted of the following (in thousands except for years): As of December 31, 2022 Gross Carrying Accumulated Net Weighted Average Remaining Useful Life Customer relationships $ 24,330 $ ( 4,759 ) $ 19,571 13.2 years Customer backlog 5,100 ( 506 ) 4,594 9.4 years Developed technology 11,207 ( 4,463 ) 6,744 5.0 years In-process research and development 890 ( 340 ) 550 3.1 years Tradenames 300 ( 17 ) 283 9.4 years Total intangible assets, net $ 41,827 $ ( 10,085 ) $ 31,742 10.7 years As of December 31, 2021 Gross Carrying Accumulated Net Weighted Average Remaining Useful Life Developed technology $ 5,007 $ ( 3,464 ) $ 1,543 4.1 years Customer relationships 5,730 ( 2,886 ) 2,844 4.6 years In-process research and development 890 ( 162 ) 728 4.1 years Total intangible assets, net $ 11,627 $ ( 6,512 ) $ 5,115 4.4 years |
Future Amortization Expense of Intangible Assets | As of December 31, 2022, expected future amortization expense for the years indicated was as follows (in thousands): 2023 $ 5,283 2024 5,283 2025 5,277 2026 4,095 2027 3,143 Thereafter 8,661 Total $ 31,742 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Future Principal Maturities of Term Loan | As of December 31, 2022, the future principal maturities of the Term Loan for each of the next five years are as follows (in thousands): 2023 $ 1,250 2024 1,563 2025 1,875 2026 2,188 2027 17,499 Total $ 24,375 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Summary of Changes In Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax | The table below summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax (in thousands): As of December 31, 2022 2021 2020 Beginning accumulated other comprehensive income $ ( 4,457 ) $ ( 2,124 ) $ ( 3,939 ) Actuarial loss for pension plan 4,278 1,713 ( 981 ) Foreign currency translation adjustments, net ( 4,172 ) ( 4,046 ) 2,796 Ending accumulated other comprehensive income $ ( 4,351 ) $ ( 4,457 ) $ ( 2,124 ) |
Summary of Option Activity under Stock Option Program | The following table sets forth the summary of option activity under the stock option program for the year ended December 31, 2022 (in thousands, except weighted average data): Options Weighted Weighted Aggregate Outstanding at the beginning of the period 2,006 $ 12.83 8.4 $ 8,277 Granted 5 15.95 Exercised ( 137 ) 10.92 Canceled/Forfeited ( 365 ) 17.67 Expired ( 13 ) 13.97 Outstanding at the end of the period 1,496 11.83 7.15 3,281 Vested and exercisable at the end of the period 756 $ 11.07 6.45 $ 2,045 |
Summary of Assumptions Used to Value Options Grants for Stock Options | The following table summarizes the weighted average assumptions used to value option grants: Years ended December 31, 2022 2021 2020 Expected term (years) 6.1 6.0 6.2 Volatility 58.9 % 59.5 % 60.5 % Risk free interest rate 1.5 % 1.1 % 0.4 % Dividend yield 0 % 0 % 0 % Weighted average fair value of stock options $ 8.83 $ 9.84 $ 5.40 |
Summary of Restricted Stock Unit Awards Activity Under Stock Award Program | The following table sets forth the summary of restricted stock units activity under the stock option program for the year ended December 31, 2022 (in thousands, except weighted average data): RSU Weighted Outstanding at the beginning of the period 1,280 $ 16.86 Granted 1,990 15.62 Cancelled/Forfeited ( 197 ) 15.64 Vested and issued ( 400 ) 16.53 Outstanding at the end of the period 2,673 16.08 Vested and unissued at the end of the period 50 15.28 Non-vested at the end of the period 2,623 $ 16.09 |
Summary of Stock Based Compensation Expense | The following table summarizes total stock-based compensation expense for stock options, restricted stock units, and ESPP (in thousands). Years ended December 31, 2022 2021 2020 Cost of revenue $ 801 $ 276 $ 86 Research and product development 4,857 1,074 395 Selling, marketing, general and administrative 10,144 7,640 4,132 $ 15,802 $ 8,990 $ 4,613 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Net Income (Loss) per Share | The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data): Years ended December 31, 2022 2021 2020 Net income (loss) $ ( 37,431 ) $ ( 34,683 ) $ ( 23,082 ) Weighted average number of shares outstanding: Basic 28,085 26,692 21,588 Effect of dilutive securities: Stock options, restricted stock units and share awards — — — Diluted 28,085 26,692 21,588 Net income (loss) per share: Basic $ ( 1.33 ) $ ( 1.30 ) $ ( 1.07 ) Diluted $ ( 1.33 ) $ ( 1.30 ) $ ( 1.07 ) |
Potential Common Stock not Included Diluted Net Income (Loss) Per Share Calculation | The following tables set forth potential common stock that is not included in the diluted net income (loss) per share calculation above because their effect would be anti-dilutive for the periods indicated (in thousands): Years ended December 31, 2022 2021 2020 Outstanding stock options 796 914 1,505 Unvested restricted stock units 324 269 20 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Geographical Breakdown of Income (Loss) Before Income Taxes | The geographical breakdown of income (loss) before income taxes is as follows (in thousands): Years ended December 31, 2022 2021 2020 Income (loss) before income taxes - Domestic $ ( 33,496 ) $ ( 6,031 ) $ ( 19,276 ) Income (loss) before income taxes - Foreign ( 1,936 ) ( 25,439 ) ( 305 ) Income (loss) before income taxes $ ( 35,432 ) $ ( 31,470 ) $ ( 19,581 ) |
Components of Income Tax Provision (Benefit) Applicable to Income (Loss) Before Income Taxes | The following is a summary of the components of income tax provision (benefit) applicable to income (loss) before income taxes (in thousands): Years ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State 89 29 28 Foreign 1,910 1,779 3,256 Total current tax provision (benefit) $ 1,999 $ 1,808 $ 3,284 Deferred: Federal $ — $ — $ — State — — — Foreign — 1,405 217 Total deferred tax provision (benefit) $ — $ 1,405 $ 217 Total tax provision (benefit) $ 1,999 $ 3,213 $ 3,501 |
Reconciliation of Expected Tax Provision (Benefit) to Actual Tax Provision (Benefit) | A reconciliation of the expected tax provision (benefit) to the actual tax provision (benefit) is as follows (in thousands): Years ended December 31, 2022 2021 2020 Expected tax provision (benefit) at statutory rate $ ( 7,441 ) $ ( 6,609 ) $ ( 4,112 ) Current state taxes, net of federal benefit 70 23 22 Deferred state taxes, net of federal benefit ( 1,122 ) 304 ( 325 ) Foreign taxes — 166 3,472 Foreign rate differential ( 358 ) ( 1,946 ) ( 65 ) Valuation allowance 2,976 11,341 2,550 Uncertain tax positions 953 2,696 — Global intangible low taxed income 5,690 — 1,241 Share-based compensation 1,862 463 520 Permanent differences 117 ( 2,613 ) 189 Tax credits ( 1,152 ) ( 1,102 ) ( 202 ) Other 404 490 211 Total tax provision (benefit) $ 1,999 $ 3,213 $ 3,501 |
Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows (in thousands): As of December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 20,050 $ 20,755 Tax credit carryforwards 4,805 5,757 Fixed assets and intangible assets 3,062 4,043 Inventory and other reserves 9,491 11,673 Operating lease liability 3,868 3,958 Capitalized research and experimental expenditures 5,674 — Other 6,199 3,600 Gross deferred tax assets 53,149 49,786 Less valuation allowance ( 49,038 ) ( 46,027 ) Deferred tax liabilities: Fixed assets and intangible assets ( 835 ) ( 856 ) Operating lease right-of-use-asset ( 2,886 ) ( 2,903 ) Other assets ( 390 ) — Gross deferred tax liabilities ( 4,111 ) ( 3,759 ) Total net deferred tax assets $ — $ — |
Reconciliation of Beginning and Ending Unrecognized Tax Benefit | A reconciliation of the beginning and ending unrecognized tax benefit amounts for 2022, 2021, and 2020 are as follows (in thousands): As of December 31, 2022 2021 2020 Balance at beginning of year $ 4,188 $ 1,255 $ 1,036 Increases (decreases) related to prior year’s tax positions ( 31 ) 2,252 — Increases related to current year tax positions 983 681 219 Balance at end of year $ 5,140 $ 4,188 $ 1,255 |
Open Tax Years for Major Jurisdictions | The open tax years for the major jurisdictions are as follows: Federal 2019 - 2022 California 2018 - 2022 Canada 2018 - 2022 Brazil 2018 - 2022 Germany 2017 - 2022 Japan 2017 - 2022 Korea 2017 - 2022 United Kingdom 2018 - 2022 Vietnam 2012 - 2022 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following table sets forth payment guarantees of certain of the Company's performance obligations as of December 31, 2022 that have been provided by DNI. DNI owns approximately 29.4 % of the outstanding shares of the Company's common stock. The amount guaranteed exceeds the principal amounts of outstanding obligations due to collateral requirements by the banks. Guarantor Amount Guaranteed Description of Obligations Guaranteed Dasan Networks, Inc. $ 3,223 Payment guarantee to Industrial Bank of Korea Dasan Networks, Inc. 1,390 Payment guarantee to Shinhan Bank $ 4,613 Other Related Party Transactions Sales, cost of revenue, research and product development, selling, marketing, general and administrative, interest expense and other expenses to and from relate parties were as follows (in thousands) for the years ended December 31, 2022, 2021, and 2020: For the year ended December 31, 2022 Counterparty Sales Cost of Research Selling, Interest Other Dasan Networks, Inc. $ 1,748 $ 969 $ 91 $ 1,234 $ 55 $ 64 DS Commerce, Inc. — 26 3 29 — — $ 1,748 $ 995 $ 94 $ 1,263 $ 55 $ 64 For the year ended December 31, 2021 Counterparty Sales Cost of Research Selling, Interest Other Dasan Networks, Inc. $ 2,103 $ 1,940 $ 1,019 $ 1,620 $ 132 $ 197 Dasan Invest Co., Ltd. — 30 134 57 — — $ 2,103 $ 1,970 $ 1,153 $ 1,677 $ 132 $ 197 For the year ended December 31, 2020 Counterparty Sales Cost of Research Selling, Interest Other 'Dasan Networks, Inc. $ 4,362 $ 3,843 $ 953 $ 1,579 $ 1,047 $ 355 Dasan Invest Co., Ltd. — 22 100 42 — — $ 4,362 $ 3,865 $ 1,053 $ 1,621 $ 1,047 $ 355 Balances of receivables and payables arising from sales and purchases of goods and services with related parties as of December 31, 2022 and 2021 were as follows (in thousands): As of December 31, 2022 Counterparty Account Other Other assets Loans Payable Accounts Accrued and other liabilities Dasan Networks, Inc. $ 943 $ 123 $ — $ 5,706 $ 1,019 $ 483 DS Commerce, Inc. — — — — 16 — $ 943 $ 123 $ — $ 5,706 $ 1,035 $ 483 As of December 31, 2021 Counterparty Account Other Other assets Loans Payable Accounts Accrued and other liabilities Dasan Networks, Inc. $ 181 $ 215 $ 691 $ — $ 785 $ — DS Commerce, Inc. — — — — — — $ 181 $ 215 $ 691 $ — $ 785 $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense were as follows for the years ended December 31, 2022, 2021 and 2020 (in thousands): Years ended December 31, 2022 2021 2020 Operating lease cost $ 4,152 $ 4,201 $ 5,393 Short-term lease cost 152 1,302 264 Total net lease cost $ 4,304 $ 5,503 $ 5,657 |
Supplemental Cash Flow Information Related to Operating Leases | Supplemental cash flow information related to the Company’s operating leases was as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands): Years ended December 31, 2022 2021 2020 Operating cash outflows from operating leases $ 5,184 $ 5,936 $ 5,307 Right-of-use assets obtained in exchange for operating lease obligations 5,010 2,783 1,405 |
Lease Balances within Condensed Consolidated Balance Sheets, Weighted Average Remaining Lease Term, and Weighted Average Discount Rates Related to Operating Leases | The following table presents the lease balances within the Company’s consolidated balance sheets, weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases as of December 31, 2022 and 2021 (dollars in thousands): As of December 31, 2022 2021 Assets: Right-of-use assets from operating leases $ 12,606 $ 12,640 Liabilities: Operating lease liabilities - current $ 4,834 $ 4,097 Operating lease liabilities - non-current 11,417 12,103 Total operating lease liabilities $ 16,251 $ 16,200 Weighted average remaining lease term 3.7 years 4.2 years Weighted average discount rate 5.3 % 5.6 % |
Maturity of Operating Lease Liabilities | The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2022 (in thousands): 2023 $ 5,129 2024 4,965 2025 3,491 2026 2,131 2027 1,018 Thereafter 685 Total operating lease payments 17,419 Less: imputed interest ( 1,168 ) Total operating lease liabilities $ 16,251 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Reconciliation of Changes in Benefit Obligation | The following provides a reconciliation of the changes in benefit obligation, and the funded status at the end of the years (in thousand): Years ended December 31, 2022 2021 2020 Benefit obligation at beginning of year $ 16,527 $ 20,052 $ 17,671 Service cost 100 115 95 Interest cost 146 82 191 Benefits paid ( 572 ) ( 592 ) ( 568 ) Actuarial (gain) loss ( 4,278 ) ( 1,606 ) 1,002 Foreign currency exchange rate change ( 902 ) ( 1,524 ) 1,661 Benefit obligation at end of year 11,021 16,527 20,052 Underfunded status at end of year $ 11,021 $ 16,527 $ 20,052 |
Schedule of Net Periodic Benefit Cost Related to Plans | The net periodic benefit cost related to the plans consisted of the following components (in thousands): Years ended December 31, 2022 2021 2020 Service Cost $ 100 $ 115 $ 95 Interest Cost 146 82 170 Net amortization of net gain (loss) — 107 21 Net periodic benefit cost $ 246 $ 304 $ 286 |
Schedule of Changes in Benefit Obligations Recognized Net of Tax in Other Comprehensive Income | The following table presents changes in benefit obligations recognized net of tax in other comprehensive income (in thousands): Years ended December 31, 2022 2021 2020 Amortization of net (gain) loss $ — $ ( 107 ) $ ( 21 ) Actuarial (gain) loss in the current period ( 4,278 ) ( 1,606 ) 1,002 Net change during the period $ ( 4,278 ) $ ( 1,713 ) $ 981 |
Weighted Average Assumptions Used In Determining Periodic Net Cost and Benefit Obligation Information Related to Plans | The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the plans are as follows: Years ended December 31, 2022 2021 2020 Discount rate 3.7 % 1.0 % 0.4 % Rate of compensation increase 2.0 % 1.7 % 1.7 % |
Schedule of Benefit Payments which Funded by Company are Expected To Be Paid | The following benefit payments, which are funded by the Company, are expected to be paid (in thousands): 2023 $ 707 2024 704 2025 730 2026 720 2027 743 2028 - 2031 $ 3,212 |
Enterprise-Wide Information (Ta
Enterprise-Wide Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Property, Plant and Equipment, Net of Accumulated Depreciation | The Company's property, plant and equipment, net of accumulated depreciation, were located in the following geographical areas (in thousands) as of December 31, 2022 and 2021: As of December 31, 2022 2021 United States $ 5,725 $ 6,105 Korea 2,706 2,367 Japan 644 799 Canada 157 280 Germany 110 210 Other 136 81 $ 9,478 $ 9,842 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2021 USD ($) | Dec. 31, 2022 USD ($) Customer | Dec. 31, 2021 USD ($) Customer | Dec. 31, 2020 USD ($) Customer | Jan. 01, 2022 USD ($) | Dec. 31, 2019 USD ($) | |
Significant Accounting Policies [Line Items] | ||||||
Entity Incorporation, State or Country Code | DE | |||||
Date of entity incorporation | 1999-06 | |||||
Net loss | $ 37,431 | $ 34,683 | $ 23,082 | |||
Accumulated deficit | (124,831) | (86,999) | ||||
Working capital | 86,500 | |||||
Cash and cash equivalents | 38,464 | $ 53,639 | $ 54,587 | $ 33,635 | ||
Debt obligations | 24,375 | |||||
Payment in 2023 | 1,250 | |||||
Billed amount under agreement | 59,000 | |||||
Amount of payments collected | 41,700 | |||||
Allowance for doubtful accounts | $ 13,100 | |||||
Accounts receivable recovered | $ 2,400 | |||||
Product warranty, life | 1 year | |||||
Optional extended product warranty, life | 3 years | |||||
Percentage of tax benefit to be realized | 50% | |||||
ASU 2014-09 | ||||||
Significant Accounting Policies [Line Items] | ||||||
Change In Accounting Principle Accounting Standards Update Adopted | true | |||||
Change In Accounting Principle Accounting Standards Update Adoption Date | Apr. 01, 2022 | |||||
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | true | |||||
ASU 2019-05 | ||||||
Significant Accounting Policies [Line Items] | ||||||
Change In Accounting Principle Accounting Standards Update Adopted | true | |||||
Change In Accounting Principle Accounting Standards Update Adoption Date | Jan. 01, 2022 | |||||
ASU 2019-05 | Cumulative Effect Period of Adoption Adjustment | ||||||
Significant Accounting Policies [Line Items] | ||||||
Accumulated deficit | $ 400 | |||||
Minimum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Invoices customers for support contracts in advance ranging periods | 1 year | |||||
Optional extended product warranty, life | 1 year | |||||
Maximum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Invoices customers for support contracts in advance ranging periods | 5 years | |||||
Optional extended product warranty, life | 5 years | |||||
Customer Concentration Risk | Sales Revenue, Net | ||||||
Significant Accounting Policies [Line Items] | ||||||
Number of major customers | Customer | 1 | 2 | 2 | |||
Customer Concentration Risk | Sales Revenue, Net | Customer One | ||||||
Significant Accounting Policies [Line Items] | ||||||
Concentration risk, percentage | 13% | 19% | 14% | |||
Customer Concentration Risk | Sales Revenue, Net | Customer Two | ||||||
Significant Accounting Policies [Line Items] | ||||||
Concentration risk, percentage | 12% | 13% | ||||
Customer Concentration Risk | Accounts receivable | ||||||
Significant Accounting Policies [Line Items] | ||||||
Number of major customers | Customer | 0 | 2 | ||||
Customer Concentration Risk | Accounts receivable | Foreign Countries | ||||||
Significant Accounting Policies [Line Items] | ||||||
Concentration risk, percentage | 86% | |||||
Customer Concentration Risk | Accounts receivable | Customer One | ||||||
Significant Accounting Policies [Line Items] | ||||||
Concentration risk, percentage | 26% | |||||
Customer Concentration Risk | Accounts receivable | Customer Two | ||||||
Significant Accounting Policies [Line Items] | ||||||
Concentration risk, percentage | 10% | |||||
Geographic Concentration Risk | Accounts receivable | Foreign Countries | ||||||
Significant Accounting Policies [Line Items] | ||||||
Concentration risk, percentage | 79% | |||||
COVID-19 | ||||||
Significant Accounting Policies [Line Items] | ||||||
Debt obligations | $ 24,100 | |||||
Unamortized issuance costs | 300 | |||||
Payment in 2023 | 1,300 | |||||
Dasan Network Solutions, Inc. (Korean subsidiary) | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash and cash equivalents | $ 13,600 | |||||
Merger Agreement with Dasan Networks, Inc | ||||||
Significant Accounting Policies [Line Items] | ||||||
Percent of voting interest acquired | 29.40% |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Schedule of Revenues by Source (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation Of Revenue [Line Items] | |||
Net revenue | $ 375,691 | $ 350,206 | $ 300,640 |
Products | |||
Disaggregation Of Revenue [Line Items] | |||
Net revenue | 335,258 | 330,093 | 280,988 |
Services and software | |||
Disaggregation Of Revenue [Line Items] | |||
Net revenue | $ 40,433 | $ 20,113 | $ 19,652 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Schedule of Information Revenues by Geographical Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Significant Accounting Policies [Line Items] | |||
Net revenue | $ 375,691 | $ 350,206 | $ 300,640 |
Americas | |||
Significant Accounting Policies [Line Items] | |||
Net revenue | 107,392 | 101,473 | 61,900 |
Europe, Middle East, Africa | |||
Significant Accounting Policies [Line Items] | |||
Net revenue | 79,286 | 70,046 | 64,580 |
Asia | |||
Significant Accounting Policies [Line Items] | |||
Net revenue | $ 189,013 | $ 178,687 | $ 174,160 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Significant Accounting Policies [Line Items] | |||
Balance at beginning of year | $ 17,735 | $ 3,954 | $ 393 |
Charged to expense, net of recoveries | (229) | 14,491 | 3,833 |
Utilization/write offs/exchange rate differences | (117) | (126) | (331) |
Foreign exchange impact | (1,606) | (584) | 59 |
Balance at end of year | 16,184 | $ 17,735 | $ 3,954 |
Cumulative effect of ASC 326 adoption | |||
Significant Accounting Policies [Line Items] | |||
Balance at end of year | $ 401 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies - Schedule of Allowance for Sales Returns (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Balance at beginning of year | $ 873 | $ 390 | $ 343 |
Charged to revenue | 2,556 | 1,132 | 1,303 |
Utilization and write off | (2,279) | (649) | (1,256) |
Balance at end of year | $ 1,150 | $ 873 | $ 390 |
Organization and Summary of S_9
Organization and Summary of Significant Accounting Policies - Schedule of Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 3 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 4 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 10 years |
Computers and software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 3 years |
Computers and software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 5 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment, estimated useful lives | Shorter of remaining lease termor estimated useful lives |
Business Combinations - Additio
Business Combinations - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
May 27, 2022 | Mar. 03, 2021 | Feb. 05, 2021 | Oct. 31, 2022 | Apr. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||||||
Goodwill | $ 19,952,000 | $ 6,145,000 | |||||
ASSIA | |||||||
Business Acquisition [Line Items] | |||||||
Reason for business combination | The CloudCheck® and Expresse® solutions are currently deployed in over 125 million connected homes globally, and many of these connections now represent recurring software revenue opportunities for DZS. | ||||||
Purchase price | $ 25,000,000 | $ 1,350,000 | |||||
Business combination hold back amounts to be released | 2,500,000 | ||||||
Reduction of goodwill | 9,000,000 | ||||||
Goodwill | 13,807,000 | ||||||
Goodwill expected to be deductible for tax purposes | $ 0 | ||||||
Revenue generated since acquisition date | $ 18,100,000 | ||||||
Optelian Access Networks Corporation | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price | $ 7,500,000 | ||||||
Goodwill | 1,900,000 | ||||||
Optelian Access Networks Corporation | Optelian Products | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price | 1,900,000 | ||||||
Held back amount | $ 300,000 | ||||||
RIFT Inc | |||||||
Business Acquisition [Line Items] | |||||||
Purchase price | $ 500,000 | ||||||
Held back amount released | $ 200,000 | ||||||
Goodwill | $ 200,000 |
Business Combinations - Summary
Business Combinations - Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | May 27, 2022 | Dec. 31, 2021 |
Provisional allocation of purchase consideration | |||
Goodwill | $ 19,952 | $ 6,145 | |
ASSIA | |||
Provisional allocation of purchase consideration | |||
Cash and cash equivalents | $ 203 | ||
Accounts receivable | 2,322 | ||
Other assets | 407 | ||
Right-of-use assets | 2,172 | ||
Property, plant and equipment | 232 | ||
Intangible assets | 30,200 | ||
Accounts payable | (75) | ||
Contract liabilities | (19,550) | ||
Operating lease liabilities | (2,612) | ||
Accrued and other liabilities | (756) | ||
Goodwill | 13,807 | ||
Total purchase consideration | $ 26,350 |
Business Combinations - Schedul
Business Combinations - Schedule of Estimated Fair Value and Useful Lives of Identifiable Intangible Assets (Details) - ASSIA $ in Thousands | May 27, 2022 USD ($) |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 30,200 |
Customer Relationships | |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 18,600 |
Estimated Useful Life | 15 years |
Customer Backlog | |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 5,100 |
Estimated Useful Life | 10 years |
Developed Technology | |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 6,200 |
Developed Technology | Minimum | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 5 years |
Developed Technology | Maximum | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 7 years |
Tradenames | |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 300 |
Estimated Useful Life | 10 years |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Reconciliation of Level 3 Contingent Liability (Details) - Selling, Marketing, General and Administrative Expenses - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||
Balance at the beginning of the period | $ 2,121 | |
Initial fair value of contingent liability | $ 1,897 | |
Cash payments | (558) | |
Net change in fair value | (407) | 224 |
Balance at the end of the period | $ 1,156 | $ 2,121 |
Cash and Cash Equivalents and_2
Cash and Cash Equivalents and Restricted Cash - Additional Information (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Cash And Cash Equivalents [Line Items] | |||
Cash and cash equivalents | $ 34,347 | $ 46,666 | $ 45,219 |
Long term restricted cash | $ 100 | $ 200 | |
Restricted Cash Equivalents, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets | |
Outside U.S. | |||
Cash And Cash Equivalents [Line Items] | |||
Cash and cash equivalents | $ 13,600 | $ 31,300 | |
Within U.S. | |||
Cash And Cash Equivalents [Line Items] | |||
Cash and cash equivalents | $ 24,900 | $ 22,300 |
Balance Sheet Detail - Schedule
Balance Sheet Detail - Schedule of Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 37,354 | $ 34,512 |
Work in process | 1,050 | 1,427 |
Finished goods | 40,109 | 20,954 |
Total inventories | $ 78,513 | $ 56,893 |
Balance Sheet Detail - Addition
Balance Sheet Detail - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Balance Sheet Details [Line Items] | |||
Capitalized cloud computing implementation costs | $ 10.5 | ||
Implementation reporting costs | $ 4.2 | ||
Contract with customer, liability, revenue recognized | $ 6 | ||
Percentage of revenue expected to recognize | 73% | ||
Contract cost deferred | $ 1 | 0.8 | |
Amortization related to contract cost deferred | 0.7 | ||
Property, Plant and Equipment | |||
Balance Sheet Details [Line Items] | |||
Depreciation and amortization associated with property, plant and equipment | $ 4.9 | $ 2.9 | $ 2.2 |
Balance Sheet Detail - Schedu_2
Balance Sheet Detail - Schedule of Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, plant and equipment, net: | ||
Property, plant and equipment, gross | $ 30,622 | $ 27,422 |
Less: accumulated depreciation and amortization | (21,062) | (17,394) |
Less: government grants | (82) | (186) |
Total property, plant and equipment, net | 9,478 | 9,842 |
Machinery and equipment | ||
Property, plant and equipment, net: | ||
Property, plant and equipment, gross | 17,214 | 14,278 |
Leasehold improvements | ||
Property, plant and equipment, net: | ||
Property, plant and equipment, gross | 5,683 | 5,219 |
Computers and software | ||
Property, plant and equipment, net: | ||
Property, plant and equipment, gross | 4,713 | 3,217 |
Furniture and fixtures | ||
Property, plant and equipment, net: | ||
Property, plant and equipment, gross | 1,748 | 1,771 |
Construction in progress and other | ||
Property, plant and equipment, net: | ||
Property, plant and equipment, gross | $ 1,264 | $ 2,937 |
Balance Sheet Detail - Schedu_3
Balance Sheet Detail - Schedule of Accrued and Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||||
Accrued taxes payable | $ 6,214 | $ 2,306 | ||
Accrued compensation | 8,897 | 7,230 | ||
Accrued acquisition holdback | 2,500 | 321 | ||
Accrued warranty | 1,896 | 1,981 | $ 1,522 | $ 1,611 |
Accrued sales returns | 1,150 | 873 | ||
Other accrued expenses | 6,902 | 3,321 | ||
Accrued and other liabilities | $ 27,559 | $ 16,032 |
Balance Sheet Detail - Summary
Balance Sheet Detail - Summary of Product Warranty Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |||
Balance at the beginning of the period | $ 1,981 | $ 1,522 | $ 1,611 |
Charged to cost of revenue | 656 | 798 | 1,072 |
Claims and settlements | (704) | (404) | (1,189) |
Foreign exchange impact | (37) | 65 | 28 |
Balance at the end of the period | $ 1,896 | $ 1,981 | $ 1,522 |
Balance Sheet Detail - Summar_2
Balance Sheet Detail - Summary of Contract Assets and Contract Liabilities Related to Contracts with Customers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Abstract] | ||
Contract Assets | $ 576 | $ 2,184 |
Increase (decrease) contract assets | (1,608) | |
Contract Liabilities | 29,641 | $ 9,135 |
Increase (decrease) contract liabilities | $ 20,506 |
Restructuring and Other Charg_2
Restructuring and Other Charges - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring Cost And Reserve [Line Items] | |||
Restructuring and other charges | $ 4,617 | $ 12,310 | |
Impairment of long-lived assets charge of right-of-use assets | 800 | 4,200 | |
Implementation costs | $ 400 | ||
Fabrinet | |||
Restructuring Cost And Reserve [Line Items] | |||
Restructuring and related activities, description | On September 17, 2022, DZS signed an agreement with Fabrinet, a third-party provider of electro-mechanical and electronic manufacturing and distribution services, to transition the sourcing, procurement, order-fulfillment, manufacturing and return merchandise authorization activities in the Company’s Seminole, Florida facility to Fabrinet. The agreement was announced on October 4, 2022. The transition to Fabrinet began in October 2022 and substantially completed in the beginning of 2023. Post transition, the DZS Seminole, Florida-based operations, supply chain and manufacturing workforce will be reduced by approximately two-thirds and the remaining team will be relocated to an appropriately sized facility. | ||
Restructuring activities signed agreement date | Sep. 17, 2022 | ||
Termination cost | $ 700 | ||
Restructuring and other charges | 3,400 | ||
Accelerated depreciation of manufacturing related assets | 1,300 | ||
Gain (loss) on sale of inventory | (500) | ||
Other charges | 900 | ||
Relocate Manufacturing Function | |||
Restructuring Cost And Reserve [Line Items] | |||
Termination cost | $ 13,100 | 8,500 | |
Restructuring and other charges | 800 | 12,300 | |
Impairment of long-lived assets charge of right-of-use assets | 2,700 | ||
Other charges | $ 1,100 | ||
Seminole | |||
Restructuring Cost And Reserve [Line Items] | |||
Liability related to termination benefits | $ 700 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Line Items] | ||
Balance at the beginning of the period, gross | $ 7,148 | $ 4,980 |
Accumulated impairment at the beginning of the period | (1,003) | (1,003) |
Goodwill from acquisitions | 13,807 | 2,168 |
Balance at the end of the period | $ 19,952 | $ 6,145 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill And Intangible Asset [Line Items] | |||
Goodwill, acquired during period | $ 13,807,000 | $ 2,168,000 | |
Goodwill, accumulated impairment loss | 1,003,000 | 1,003,000 | |
Goodwill, impairment loss | 0 | 0 | $ 0 |
Intangible assets net excluding goodwill | 31,742,000 | 5,115,000 | |
Amortization of intangible assets | 3,600,000 | $ 1,600,000 | 3,000,000 |
DZS GmbH (formerly Keymile Gmbh) | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangibles impairment charge | 6,500,000 | ||
DZS GmbH (formerly Keymile Gmbh) | Developed Technology | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangibles impairment charge | 3,300,000 | ||
DZS GmbH (formerly Keymile Gmbh) | Customer Relationships | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangibles impairment charge | 2,300,000 | ||
DZS GmbH (formerly Keymile Gmbh) | In-Process Research And Development | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangibles impairment charge | $ 900,000 | ||
ASSIA | |||
Goodwill And Intangible Asset [Line Items] | |||
Goodwill, acquired during period | 13,800,000 | ||
ASSIA | Developed Technology | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangible assets net excluding goodwill | 6,200,000 | ||
ASSIA | Customer Relationships | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangible assets net excluding goodwill | 18,600,000 | ||
ASSIA | Orders Backlog | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangible assets net excluding goodwill | 5,100,000 | ||
ASSIA | Tradenames | |||
Goodwill And Intangible Asset [Line Items] | |||
Intangible assets net excluding goodwill | $ 300,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 41,827 | $ 11,627 |
Accumulated Amortization | (10,085) | (6,512) |
Intangible assets, net | $ 31,742 | $ 5,115 |
Weighted Average Remaining Useful Life | 10 years 8 months 12 days | 4 years 4 months 24 days |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 24,330 | $ 5,730 |
Accumulated Amortization | (4,759) | (2,886) |
Intangible assets, net | $ 19,571 | $ 2,844 |
Weighted Average Remaining Useful Life | 13 years 2 months 12 days | 4 years 7 months 6 days |
Customer Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 5,100 | |
Accumulated Amortization | (506) | |
Intangible assets, net | $ 4,594 | |
Weighted Average Remaining Useful Life | 9 years 4 months 24 days | |
Developed Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 11,207 | $ 5,007 |
Accumulated Amortization | (4,463) | (3,464) |
Intangible assets, net | $ 6,744 | $ 1,543 |
Weighted Average Remaining Useful Life | 5 years | 4 years 1 month 6 days |
In-Process Research And Development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 890 | $ 890 |
Accumulated Amortization | (340) | (162) |
Intangible assets, net | $ 550 | $ 728 |
Weighted Average Remaining Useful Life | 3 years 1 month 6 days | 4 years 1 month 6 days |
Tradenames | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 300 | |
Accumulated Amortization | (17) | |
Intangible assets, net | $ 283 | |
Weighted Average Remaining Useful Life | 9 years 4 months 24 days |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Expected Future Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 5,283 | |
2024 | 5,283 | |
2025 | 5,277 | |
2026 | 4,095 | |
2027 | 3,143 | |
Thereafter | 8,661 | |
Intangible assets, net | $ 31,742 | $ 5,115 |
Debt - Additional Information (
Debt - Additional Information (Details) ₩ in Billions | 1 Months Ended | 12 Months Ended | |||||||||||
Feb. 15, 2023 USD ($) | Oct. 31, 2022 USD ($) | May 27, 2022 USD ($) | Feb. 09, 2022 USD ($) | Nov. 30, 2022 USD ($) Customer | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2023 KRW (₩) | Dec. 31, 2022 KRW (₩) | Nov. 30, 2022 KRW (₩) | Oct. 31, 2022 KRW (₩) | |
Line Of Credit Facility [Line Items] | |||||||||||||
Debt obligations | $ 24,375,000 | ||||||||||||
Current portion of long-term debt | 24,073,000 | ||||||||||||
Interest expense, related party | 100,000 | $ 100,000 | $ 1,000,000 | ||||||||||
Borrowings outstanding from related parties | 0 | ||||||||||||
DNI | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Debt | 29,800,000 | ||||||||||||
DNI | Loan Agreement | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 5,000,000 | ₩ 7.2 | |||||||||||
Interest rate | 6% | 6% | |||||||||||
Debt outstanding | 5,700,000 | ₩ 7.2 | |||||||||||
Account receivables | $ 15,800,000 | ₩ 20 | |||||||||||
Line of credit security interest | $ 22,400,000 | 28.2 | |||||||||||
Number of customers | Customer | 2 | ||||||||||||
Frequency of payment | monthly | ||||||||||||
Maturity date | Jan. 31, 2023 | ||||||||||||
Principal payments | $ 0 | ||||||||||||
Minimum | DNI | Loan Agreement | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Line of credit security interest | $ 7,900,000 | ₩ 10 | |||||||||||
Subsequent Event | DNI | Loan Agreement | Short-Term Loan Arrangement | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 4,100,000 | ₩ 5 | |||||||||||
JPMorgan Credit Facility | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Debt obligations | 24,100,000 | $ 0 | |||||||||||
Unamortized issuance costs | 300,000 | ||||||||||||
Current portion of long-term debt | 22,800,000 | ||||||||||||
JPMorgan Credit Facility | Letter of Credit | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 15,000,000 | 100,000 | |||||||||||
Revolving Credit Agreement | JPMorgan Credit Facility | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 30,000,000 | 30,000,000 | 30,000,000 | ||||||||||
Credit facility, current borrowing capacity | $ 10,000,000 | ||||||||||||
Credit facility, expiration date | Feb. 09, 2024 | ||||||||||||
Debt outstanding | 4,000,000 | ||||||||||||
Available Additional borrowing under credit facilities | $ 25,900,000 | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Maturity date of revolving commitments | May 27, 2025 | ||||||||||||
Credit facility covenant description | modifies the financial covenants to (i) increase the maximum permitted leverage ratio to 3.00 to 1.00 through September 30, 2022, 2.50 to 1.00 thereafter through September 30, 2023, and 2.00 to 1.00 thereafter and (ii) replace the minimum liquidity requirement with a minimum permitted fixed charge coverage ratio of 1.25 to 1.00. | ||||||||||||
Maximum permitted leverage ratio through September 30, 2022 | 3 | ||||||||||||
Maximum permitted leverage ratio through September 30, 2023 | 2.50 | ||||||||||||
Minimum permitted fixed charge coverage ratio | 1.25 | ||||||||||||
Maximum permitted leverage ratio after September 30 2023 | 2 | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Maximum | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Commitment fee percentage on unused capacity | 0.35% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Maximum | Adjusted Term SOFR Rate | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Interest rate | 3.50% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Maximum | Prime Rate | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Interest rate | 2.50% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Minimum | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Commitment fee percentage on unused capacity | 0.25% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Minimum | Adjusted Term SOFR Rate | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Interest rate | 3% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Minimum | Prime Rate | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Interest rate | 2% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Letter of Credit | Maximum | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Commitment fee percentage | 3.50% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Letter of Credit | Minimum | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Commitment fee percentage | 3% | ||||||||||||
Amendment to Credit Agreement | JPMorgan Credit Facility | Term Loan | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 25,000,000 | ||||||||||||
Credit facility, expiration date | May 27, 2027 | ||||||||||||
Second Amendment to Credit Agreement | Subsequent Event | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Minimum EBITDA for the fiscal quarter ending June 30, 2023 | $ 1,000,000 | ||||||||||||
Minimum EBITDA for fiscal quarter ending March 31, 2023 | $ 1,000,000 | ||||||||||||
Second Amendment to Credit Agreement | JPMorgan Credit Facility | Subsequent Event | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Commitment fee percentage on unused capacity | 0.40% | ||||||||||||
Maximum permitted leverage ratio through September 30, 2023 | 0.0250 | ||||||||||||
Maximum permitted leverage ratio until December 31 2023 | 0.0125 | ||||||||||||
Minimum liquidity for fiscal quarter ending March 31, 2023 | $ 30,000,000 | ||||||||||||
Minimum liquidity fiscal quarters ending June 30, 2023 and September 30, 2023 | 35,000,000 | ||||||||||||
Minimum liquidity any time until September 30, 2023 | $ 20,000,000 | ||||||||||||
Leverage ratio | 2.50% | ||||||||||||
Second Amendment to Credit Agreement | JPMorgan Credit Facility | Subsequent Event | Adjusted Term SOFR Rate | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Interest rate | 4% | ||||||||||||
Second Amendment to Credit Agreement | JPMorgan Credit Facility | Subsequent Event | Prime Rate | |||||||||||||
Line Of Credit Facility [Line Items] | |||||||||||||
Interest rate | 3% |
Debt - Schedule of Future Princ
Debt - Schedule of Future Principal Maturities of Term Loan (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 1,250 |
2024 | 1,563 |
2025 | 1,875 |
2026 | 2,188 |
2027 | 17,499 |
Total | $ 24,375 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) | 12 Months Ended | ||||||||
Nov. 16, 2022 | Jan. 26, 2021 | May 22, 2018 | Jan. 04, 2017 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2022 | Feb. 28, 2017 | |
Stockholders Equity [Line Items] | |||||||||
Common stock, authorized (in shares) | 36,000,000 | 36,000,000 | |||||||
Preferred stock, authorized (in shares) | 25,000,000 | ||||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | ||||||||
Common stock, issued (in shares) | 30,968,000 | 27,505,000 | |||||||
Common stock, outstanding (in shares) | 30,968,000 | 27,505,000 | |||||||
Preferred stock, issued (in shares) | 0 | ||||||||
Net proceeds from equity offering after deducting underwriting discounts and commissions and offering expenses | $ 30,774,000 | $ 59,525,000 | |||||||
Foreign currency translation adjustments, tax | $ 0 | 0 | $ 700,000 | ||||||
Granted (in USD per share) | $ 15.95 | ||||||||
Closing stock price (in USD per share) | $ 12.68 | ||||||||
Aggregate intrinsic value, exercised | $ 500,000 | 6,200,000 | 1,900,000 | ||||||
Stock Options | |||||||||
Stockholders Equity [Line Items] | |||||||||
Share-based compensation expense | 3,200,000 | $ 3,700,000 | $ 3,200,000 | ||||||
Unrecognized compensation cost related to unvested stock based payments | $ 3,400,000 | ||||||||
Unrecognized compensation cost related to unvested stock based payments, weighted average recognition period | 2 years | ||||||||
Expected term (years) | 6 years 1 month 6 days | 6 years | 6 years 2 months 12 days | ||||||
Volatility | 58.90% | 59.50% | 60.50% | ||||||
Risk free interest rate | 1.50% | 1.10% | 0.40% | ||||||
Restricted Stock Units | |||||||||
Stockholders Equity [Line Items] | |||||||||
Granted | 1,990,000 | ||||||||
Share-based compensation expense | $ 11,800,000 | $ 4,600,000 | $ 1,100,000 | ||||||
Unrecognized compensation cost related to unvested stock based payments | $ 34,000,000 | ||||||||
Unrecognized compensation cost related to unvested stock based payments, weighted average recognition period | 2 years 6 months | ||||||||
Grant-date fair value of awards granted | $ 31,600,000 | 22,200,000 | 4,900,000 | ||||||
Fair value of awards vested | 7,400,000 | 3,100,000 | 500,000 | ||||||
Employee Stock Purchase Plan (ESPP) | |||||||||
Stockholders Equity [Line Items] | |||||||||
Percentage of outstanding shares | 1% | ||||||||
Common stock issued or transferred, maximum | 2,000,000,000 | ||||||||
Shares available for grant | 250,000,000 | ||||||||
Share-based compensation expense | $ 800,000 | $ 700,000 | $ 300,000 | ||||||
Percentage of purchase price of shares, lower of the fair market value of common stock | 85% | ||||||||
Expected term (years) | 6 months | ||||||||
Volatility | 54.10% | ||||||||
Risk free interest rate | 1.40% | ||||||||
Underwriting Agreement | Underwritten Public Offering | |||||||||
Stockholders Equity [Line Items] | |||||||||
Sale of common stock | 2,900,000 | 4,600,000 | |||||||
Common stock, price per share | $ 11.50 | $ 14 | |||||||
Gross proceeds from equity offering | $ 33,200,000 | $ 64,400,000 | |||||||
Net proceeds from equity offering after deducting underwriting discounts and commissions and offering expenses | $ 30,800,000 | $ 59,500,000 | |||||||
Underwriting Agreement | Underwriters’ Option to Purchase Additional Shares | |||||||||
Stockholders Equity [Line Items] | |||||||||
Sale of common stock | 400,000 | 600,000 | |||||||
2017 Plan [Member] | |||||||||
Stockholders Equity [Line Items] | |||||||||
Common stock, authorized (in shares) | 1,099,636 | 1,174,359,000 | |||||||
Common stock, shares reserved for future issuance | 5,000,000 | ||||||||
Expiration period of options | 10 years | ||||||||
Vesting period | 4 years | ||||||||
Percentage of outstanding shares | 4% | ||||||||
Maximum shares granted per individual | 4,000,000,000 | ||||||||
Maximum cash paid from grants per individual | $ 10,000,000 | ||||||||
Common stock issued or transferred, maximum | 8,000,000,000 | ||||||||
Stock option cancelled | 240,792 | ||||||||
Incremental expense | $ 0 | ||||||||
2017 Plan [Member] | Restricted Stock Units | |||||||||
Stockholders Equity [Line Items] | |||||||||
Granted | 120,396 | ||||||||
2017 Plan [Member] | Chief Executive Officer | |||||||||
Stockholders Equity [Line Items] | |||||||||
Shares available for grant | 518,518 | ||||||||
Granted (in USD per share) | $ 10.11 | ||||||||
2017 Plan [Member] | 10 percent stockholder | |||||||||
Stockholders Equity [Line Items] | |||||||||
Minimum Stock Option Exercise Price Ten Percent Owners | 110% | ||||||||
2017 Plan [Member] | Maximum | |||||||||
Stockholders Equity [Line Items] | |||||||||
Expiration period of options | 10 years | ||||||||
2017 Plan [Member] | Minimum | |||||||||
Stockholders Equity [Line Items] | |||||||||
Expiration period of options | 7 years |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Changes In Accumulated Other Comprehensive Income (Loss) by Component, Net of Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Actuarial loss for pension plan | $ 4,278 | $ 1,713 | $ (981) |
Foreign currency translation adjustments | (4,172) | (4,046) | 2,796 |
Accumulated other comprehensive income (loss) | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning accumulated other comprehensive income | (4,457) | (2,124) | (3,939) |
Ending accumulated other comprehensive income | $ (4,351) | $ (4,457) | $ (2,124) |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Options Outstanding | ||
Outstanding at the beginning of the period (in options) | 2,006 | |
Granted (in options) | 5 | |
Exercised (in options) | (137) | |
Canceled/Forfeited (in options) | (365) | |
Expired (in options) | (13) | |
Options outstanding at the end of the period (in options) | 1,496 | 2,006 |
Vested and exercisable at the end of the period | 756 | |
Weighted Average Exercise Price | ||
Options outstanding at beginning of period (in USD per share) | $ 12.83 | |
Granted (in USD per share) | 15.95 | |
Exercised (in USD per share) | 10.92 | |
Canceled/Forfeited (in USD per share) | 17.67 | |
Expired (in USD per share) | 13.97 | |
Options outstanding at end of period (in USD per share) | 11.83 | $ 12.83 |
Vested and exercisable at the end of the period | $ 11.07 | |
Weighted Average Remaining Contractual Term (years) | ||
Stock options outstanding | 7 years 1 month 24 days | 8 years 4 months 24 days |
Vested and exercisable at the end of the period | 6 years 5 months 12 days | |
Aggregate intrinsic value | ||
Outstanding | $ 3,281 | $ 8,277 |
Vested and exercisable at the end of the period | $ 2,045 |
Stockholders' Equity - Summar_3
Stockholders' Equity - Summary of Assumptions used to Value Options Grants (Details) - Stock Options - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement Assumptions Used To Estimate Fair Values Of Share Options Granted [Line Items] | |||
Expected term (years) | 6 years 1 month 6 days | 6 years | 6 years 2 months 12 days |
Volatility | 58.90% | 59.50% | 60.50% |
Risk free interest rate | 1.50% | 1.10% | 0.40% |
Dividend yield | 0% | 0% | 0% |
Weighted average fair value of stock options | $ 8.83 | $ 9.84 | $ 5.40 |
Stockholders' Equity - Summar_4
Stockholders' Equity - Summary of Restricted Stock Unit Awards Activity (Details) - Restricted Stock Units shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
RSU Outstanding | |
Outstanding at the beginning of the period | shares | 1,280 |
Granted | shares | 1,990 |
Cancelled/Forfeited | shares | (197) |
Vested and issued | shares | (400) |
Outstanding at the end of the period | shares | 2,673 |
Vested and unissued at the end of the period | shares | 50 |
Non-vested at the end of the period | shares | 2,623 |
Weighted Average Grant Date Fair Value | |
Outstanding at the beginning of the period | $ / shares | $ 16.86 |
Granted | $ / shares | 15.62 |
Cancelled/Forfeited | $ / shares | 15.64 |
Vested and issued | $ / shares | 16.53 |
Outstanding at the end of the period | $ / shares | 16.08 |
Vested and unissued at the end of the period | $ / shares | 15.28 |
Non-vested at the end of the period | $ / shares | $ 16.09 |
Stockholders' Equity - Summar_5
Stockholders' Equity - Summary of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stockholders Equity [Line Items] | |||
Stock-based compensation | $ 15,802 | $ 8,990 | $ 4,613 |
Cost of Revenue | |||
Stockholders Equity [Line Items] | |||
Stock-based compensation | 801 | 276 | 86 |
Research and Product Development | |||
Stockholders Equity [Line Items] | |||
Stock-based compensation | 4,857 | 1,074 | 395 |
Selling, Marketing, General and Administrative Expenses | |||
Stockholders Equity [Line Items] | |||
Stock-based compensation | $ 10,144 | $ 7,640 | $ 4,132 |
Net Income (Loss) Per Share - C
Net Income (Loss) Per Share - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |||
Net loss | $ (37,431) | $ (34,683) | $ (23,082) |
Weighted average shares outstanding | |||
Basic (in shares) | 28,085 | 26,692 | 21,588 |
Effect of dilutive securities: | |||
Diluted (in shares) | 28,085 | 26,692 | 21,588 |
Net income (loss) per share: | |||
Basic (in dollar per share) | $ (1.33) | $ (1.30) | $ (1.07) |
Diluted (in dollar per share) | $ (1.33) | $ (1.30) | $ (1.07) |
Net Income (Loss) Per Share - A
Net Income (Loss) Per Share - Antidilutive Securities Excluded from Computation of Earning Per Share (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Outstanding Stock Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of loss per share calculation, shares | 796 | 914 | 1,505 |
Unvested Restricted Stock Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of loss per share calculation, shares | 324 | 269 | 20 |
Net Income (Loss) Per Share -_2
Net Income (Loss) Per Share - Additional Information (Details) - shares | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Earnings Per Share Basic [Line Items] | |||
Common stock, issued (in shares) | 30,968,000 | 27,505,000 | |
Treasury Stock [Member] | |||
Earnings Per Share Basic [Line Items] | |||
Common stock, issued (in shares) | 0 | 0 | 0 |
Income Taxes - Geographical Bre
Income Taxes - Geographical Breakdown of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes [Line Items] | |||
Income (loss) before income taxes | $ (35,432) | $ (31,470) | $ (19,581) |
Domestic | |||
Income Taxes [Line Items] | |||
Income (loss) before income taxes | (33,496) | (6,031) | (19,276) |
Foreign | |||
Income Taxes [Line Items] | |||
Income (loss) before income taxes | $ (1,936) | $ (25,439) | $ (305) |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Provision (Benefit) Applicable to Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
State | $ 89 | $ 29 | $ 28 |
Foreign | 1,910 | 1,779 | 3,256 |
Total current tax provision (benefit) | 1,999 | 1,808 | 3,284 |
Deferred: | |||
Foreign | 1,405 | 217 | |
Total deferred tax provision (benefit) | 1,405 | 217 | |
Total tax provision (benefit) | $ 1,999 | $ 3,213 | $ 3,501 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Expected Tax Provision (Benefit) to Actual Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Expected tax provision (benefit) at statutory rate | $ (7,441) | $ (6,609) | $ (4,112) |
Current state taxes, net of federal benefit | 70 | 23 | 22 |
Deferred state taxes, net of federal benefit | (1,122) | 304 | (325) |
Foreign taxes | 166 | 3,472 | |
Foreign rate differential | (358) | (1,946) | (65) |
Valuation allowance | 2,976 | 11,341 | 2,550 |
Uncertain tax positions | 953 | 2,696 | |
Global intangible low taxed income | 5,690 | 1,241 | |
Share-based compensation | 1,862 | 463 | 520 |
Permanent differences | 117 | (2,613) | 189 |
Tax credit carry-forwards | (1,152) | (1,102) | (202) |
Other | 404 | 490 | 211 |
Total tax provision (benefit) | $ 1,999 | $ 3,213 | $ 3,501 |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 20,050 | $ 20,755 |
Tax credit carryforwards | 4,805 | 5,757 |
Fixed assets and intangible assets | 3,062 | 4,043 |
Inventory and other reserves | 9,491 | 11,673 |
Operating lease liability | 3,868 | 3,958 |
Capitalized research and experimental expenditures | 5,674 | |
Other | 6,199 | 3,600 |
Gross deferred tax assets | 53,149 | 49,786 |
Less valuation allowance | (49,038) | (46,027) |
Deferred tax liabilities: | ||
Fixed assets and intangible assets | (835) | (856) |
Operating lease right-of-use-asset | (2,886) | (2,903) |
Other assets | (390) | |
Gross deferred tax liabilities | $ (4,111) | $ (3,759) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes [Line Items] | ||||
Change in deferred tax valuation allowance | $ 3,000,000 | $ 14,000,000 | ||
Minimum cumulative change in ownership percentage for annual use of net operating losses and tax credit carryforwards | 50% | |||
Minimum cumulative change in ownership percentage for annual use of net operating losses and tax credit carryforwards period | 3 years | |||
Increased reserve for tax positions | 2,252,000 | |||
Unrecognized tax benefits | $ 5,140,000 | 4,188,000 | $ 1,255,000 | $ 1,036,000 |
Unrecognized tax benefits that, if recognized, would reduce effective tax rate | 0 | |||
Interest or penalties | 0 | $ 0 | ||
Canada | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 5,100,000 | |||
Operating loss carryforwards, expiration start year | 2039 | |||
Operating loss carryforwards, expiration period | 20 years | |||
Canada | Research Credit Carryforwards | ||||
Income Taxes [Line Items] | ||||
Tax credit carry forward | $ 2,800,000 | |||
Tax credit carryforward, expiration start year | 2031 | |||
Canada | Investment Credit | ||||
Income Taxes [Line Items] | ||||
Tax credit carry forward | $ 1,800,000 | |||
Federal | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | 27,700,000 | |||
Operating losses expire in 2037 | $ 6,600,000 | |||
Operating losses expiration year | 2037 | |||
Operating loss carryforwards not subject to expiration | $ 21,100,000 | |||
Federal | Research and Developmemt Tax Credit Carryforwards | ||||
Income Taxes [Line Items] | ||||
Tax credit carry forward | $ 2,900,000 | |||
Tax credit carryforward, expiration start year | 2036 | |||
Federal | GERMANY | Indefinite Period | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 28,900,000 | |||
State | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 31,500,000 | |||
Operating loss carryforwards, expiration start year | 2023 | |||
Operating losses expire in 2037 | $ 28,800,000 | |||
Operating loss carryforwards not subject to expiration | 2,700,000 | |||
State | Research and Developmemt Tax Credit Carryforwards | ||||
Income Taxes [Line Items] | ||||
Tax credit carry forward | $ 2,100,000 | |||
Research and development tax credit carryforward expiration, description | The California credit carryforwards do not expire, the Georgia credit carryforwards will expire beginning in 2026, and the Texas credit carryforwards will expire beginning in 2040. | |||
State | GERMANY | Indefinite Period | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 27,900,000 | |||
State | Georgia | Research and Developmemt Tax Credit Carryforwards | ||||
Income Taxes [Line Items] | ||||
Tax credit carryforward, expiration start year | 2026 | |||
State | Texas | Research and Developmemt Tax Credit Carryforwards | ||||
Income Taxes [Line Items] | ||||
Tax credit carryforward, expiration start year | 2040 |
Income Taxes - Reconciliation_2
Income Taxes - Reconciliation of Beginning and Ending Unrecognized Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Balance at beginning of year | $ 4,188 | $ 1,255 | $ 1,036 |
(Decreases) related to prior year's tax positions | (31) | ||
Increases related to prior year's tax positions | 2,252 | ||
Increases related to current year tax positions | 983 | 681 | 219 |
Balance at end of year | $ 5,140 | $ 4,188 | $ 1,255 |
Income Taxes - Open Tax Years f
Income Taxes - Open Tax Years for Major Jurisdictions (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Federal | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2019 |
Federal | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
California | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2018 |
California | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
Canada | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2018 |
Canada | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
Brazil | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2018 |
Brazil | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
Germany | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2017 |
Germany | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
Japan | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2017 |
Japan | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
Korea | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2017 |
Korea | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
United Kingdom | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2018 |
United Kingdom | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
Vietnam | Minimum | |
Income Taxes [Line Items] | |
Open tax years | 2012 |
Vietnam | Maximum | |
Income Taxes [Line Items] | |
Open tax years | 2022 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) $ in Thousands, ₩ in Billions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2022 KRW (₩) | |
Related Party Transaction [Line Items] | ||||
Outstanding from related party borrowings | $ 5,700 | ₩ 7.2 | ||
Operating lease cost | 4,152 | $ 4,201 | $ 5,393 | |
Right-of-use assets from operating leases | 12,606 | 12,640 | ||
Operating lease liability | $ 16,251 | 16,200 | ||
DASAN | Majority Shareholder | ||||
Related Party Transaction [Line Items] | ||||
DNI direct ownership interest | 29.40% | 29.40% | ||
Guarantee fee, percent | 0.90% | |||
DNS Korea | ||||
Related Party Transaction [Line Items] | ||||
Operating lease cost | $ 500 | 1,800 | 1,700 | |
Right-of-use assets from operating leases | 1,700 | 6,400 | ||
Operating lease liability | $ 1,700 | 6,400 | ||
license fee, percent | 0.40% | |||
License expense | $ 700 | $ 700 | $ 600 |
Related Party Transactions - In
Related Party Transactions - Indebtedness And Other Obligations Payment Guarantees (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Related Party Transaction [Line Items] | |
Amount Guaranteed | $ 4,613 |
Payment Guarantee to Industrial Bank of Korea | |
Related Party Transaction [Line Items] | |
Amount Guaranteed | 3,223 |
Payment Guarantee to Shinhan Bank | |
Related Party Transaction [Line Items] | |
Amount Guaranteed | $ 1,390 |
Related Party Transactions - Sa
Related Party Transactions - Sales and Purchases To and From Related Parties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Interest expense | $ 100 | $ 100 | $ 1,000 |
Sales And Purchases To And From Related Parties | |||
Related Party Transaction [Line Items] | |||
Sales | 1,748 | 2,103 | 4,362 |
Cost of revenue | 995 | 1,970 | 3,865 |
Research and product development | 94 | 1,153 | 1,053 |
Selling, marketing, general and administrative | 1,263 | 1,677 | 1,621 |
Interest expense | 55 | 132 | 1,047 |
Other expenses | 64 | 197 | 355 |
DASAN | Majority Shareholder | Sales And Purchases To And From Related Parties | |||
Related Party Transaction [Line Items] | |||
Sales | 1,748 | 2,103 | 4,362 |
Cost of revenue | 969 | 1,940 | 3,843 |
Research and product development | 91 | 1,019 | 953 |
Selling, marketing, general and administrative | 1,234 | 1,620 | 1,579 |
Interest expense | 55 | 132 | 1,047 |
Other expenses | 64 | 197 | 355 |
DASAN | Affiliated Entity | Sales And Purchases To And From Related Parties | |||
Related Party Transaction [Line Items] | |||
Cost of revenue | 26 | 30 | 22 |
Research and product development | 3 | 134 | 100 |
Selling, marketing, general and administrative | $ 29 | $ 57 | $ 42 |
Related Party Transactions - Ba
Related Party Transactions - Balances of Receivables and Payables with Related Parties (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transaction [Line Items] | ||
Other assets | $ 15,536 | $ 8,950 |
Loans Payable | 24,375 | |
Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Account receivables | 943 | 181 |
Other receivables | 123 | 215 |
Other assets | 691 | |
Loans Payable | 5,706 | |
Accounts payable | 1,035 | 785 |
Accrued and other liabilities | 483 | |
DASAN | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Account receivables | 943 | 181 |
Other receivables | 123 | 215 |
Other assets | 691 | |
Loans Payable | 5,706 | |
Accounts payable | 1,019 | $ 785 |
Accrued and other liabilities | 483 | |
DS | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Accounts payable | $ 16 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Operating lease cost | $ 4,152 | $ 4,201 | $ 5,393 |
Short-term lease cost | 152 | 1,302 | 264 |
Total net lease cost | $ 4,304 | $ 5,503 | $ 5,657 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee Lease Description [Line Items] | |||
Variable lease cost | $ 0 | $ 0 | $ 0 |
Impairment charges on right of use assets | $ 800 | 4,200 | |
Germany | |||
Lessee Lease Description [Line Items] | |||
Restructuring charges | 2,500 | ||
Texas | |||
Lessee Lease Description [Line Items] | |||
Restructuring charges | $ 1,700 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Operating cash outflows from operating leases | $ 5,184 | $ 5,936 | $ 5,307 |
Right-of-use assets obtained in exchange for operating lease obligations | $ 5,010 | $ 2,783 | $ 1,405 |
Leases - Lease Balances within
Leases - Lease Balances within Condensed Consolidated Balance Sheets, Weighted Average Remaining Lease Term, and Weighted Average Discount Rates Related to Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Right-of-use assets from operating leases | $ 12,606 | $ 12,640 |
Operating lease liabilities | 4,834 | 4,097 |
Operating lease liabilities - non-current | 11,417 | 12,103 |
Total operating lease liabilities | $ 16,251 | $ 16,200 |
Weighted average remaining lease term | 3 years 8 months 12 days | 4 years 2 months 12 days |
Weighted average discount rate | 5.30% | 5.60% |
Leases - Maturity of Operating
Leases - Maturity of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2023 | $ 5,129 | |
2024 | 4,965 | |
2025 | 3,491 | |
2026 | 2,131 | |
2027 | 1,018 | |
Thereafter | 685 | |
Total operating lease payments | 17,419 | |
Less: imputed interest | (1,168) | |
Total operating lease liabilities | $ 16,251 | $ 16,200 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Guarantee Obligations [Line Items] | |
Outstanding purchase order commitments | $ 112.6 |
Underpaid duties | 3.9 |
Performance Guarantee | |
Guarantee Obligations [Line Items] | |
Guarantor obligations | $ 11.8 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of match | 8.30% | ||
Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, insurance contract amount | $ 2.5 | $ 2.9 | |
United States | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined contribution plan expense | $ 0.9 | 0.5 | $ 0 |
South Korea | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined contribution plan expense | $ 1.2 | $ 1.3 |
Employee Benefit Plans - Reconc
Employee Benefit Plans - Reconciliation of Changes in Benefit Obligation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |||
Benefit obligation at beginning of year | $ 16,527 | $ 20,052 | $ 17,671 |
Service cost | 100 | 115 | 95 |
Interest cost | $ 146 | $ 82 | $ 191 |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Benefits paid | $ (572) | $ (592) | $ (568) |
Actuarial (gain) loss | (4,278) | (1,606) | 1,002 |
Foreign currency exchange rate change | (902) | (1,524) | 1,661 |
Benefit obligation at end of year | 11,021 | 16,527 | 20,052 |
Underfunded status at end of year | $ 11,021 | $ 16,527 | $ 20,052 |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of Net Periodic Benefit Cost Related to Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |||
Service cost | $ 100 | $ 115 | $ 95 |
Interest Cost | 146 | 82 | 170 |
Net amortization of net gain (loss) | $ 107 | $ 21 | |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Amortization of Prior Service Cost (Credit), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | |
Net periodic benefit cost | $ 246 | $ 304 | $ 286 |
Employee Benefit Plans - Sche_2
Employee Benefit Plans - Schedule of Changes in Benefit Obligations Recognized Net of Tax in Other Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |||
Amortization of net (gain) loss | $ (107) | $ (21) | |
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | |
Actuarial (gain) loss | $ (4,278) | $ (1,606) | $ 1,002 |
Net change during the period | $ (4,278) | $ (1,713) | $ 981 |
Employee Benefit Plans - Weight
Employee Benefit Plans - Weighted Average Assumptions Used In Determining Periodic Net Cost and Benefit Obligation Information Related to Plans (Details) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Retirement Benefits [Abstract] | |||
Discount rate | 3.70% | 1% | 0.40% |
Rate of compensation increase | 2% | 1.70% | 1.70% |
Employee Benefit Plans - Sche_3
Employee Benefit Plans - Schedule of Benefit Payments which Funded by Company are Expected To Be Paid (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Retirement Benefits [Abstract] | |
2023 | $ 707 |
2024 | 704 |
2025 | 730 |
2026 | 720 |
2027 | 743 |
2028 - 2031 | $ 3,212 |
Enterprise-Wide Information - P
Enterprise-Wide Information - Property, Plant and Equipment, Net of Accumulated Depreciation (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | $ 9,478 | $ 9,842 |
United States | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | 5,725 | 6,105 |
Korea | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | 2,706 | 2,367 |
Japan | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | 644 | 799 |
Canada | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | 157 | 280 |
Germany | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | 110 | 210 |
Other | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | $ 136 | $ 81 |