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kmorris50 authored Mar 27, 2024
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### Multi-SKU ARR Recognition
## Multi-SKU ARR Recognition

In line with the Company's Cody + Search strategy, Finance believes it is important to introduce a multi-SKU ARR recognition guidance. Multi-SKU ARR recognition provides more granular insights into product performance, aids in customer segmentation, supports revenue optimization, and boosts investor confidence. By documenting and following this process, the company ensures accurate financial reporting, effective decision-making, and sustainable growth in the competitive market landscape.
In line with the Company's Cody + Search strategy, Finance believes it is important to introduce a multi-SKU ARR recognition guidance. Multi-SKU ARR recognition provides more granular insights into product performance, aids in customer segmentation, supports revenue optimization, and boosts investor confidence. By documenting and following this guidance, the company ensures accurate financial reporting, effective decision-making, and sustainable growth in the competitive market landscape.

Currently, we are categorizing enterprise ARR into four buckets:

Expand Down Expand Up @@ -28,13 +28,13 @@ Platform fees or any other ongoing fee charged to the customer will also impact

### Software (Code Search & Cody) ARR Recognition

## Only Code Search OR Cody
#### Only Code Search OR Cody

Cody-only or Code Search-only deals are perhaps the most straightforward in which 100% of the seat quantity times price is attributable to Cody or Code Search, respectively.

## Code Intelligence Platform
#### Code Intelligence Platform

- Code Intelligence platform deals are less straightforward in terms of product ARR allocation, given the standalone list prices for Search ($588) & Cody ($228) added together ($816) are greater than the Code AI list price ($708). Finance’s recommendation is to keep the same percent allocation of the standalone prices added together.
Code Intelligence platform deals are less straightforward in terms of product ARR allocation, given the standalone list prices for Search ($588) & Cody ($228) added together ($816) are greater than the Code AI list price ($708). Finance’s recommendation is to keep the same percent allocation of the standalone prices added together.

For Code Intelligence Platform:

Expand All @@ -46,12 +46,14 @@ For Code Intelligence Platform (Cody BYOK):
- Cody ARR percent allocation for each unit at Code Intelligence Platform list price equals $180 / ($180 + $588) = 23%
- Search ARR percent allocation for each unit at Code Intelligence Platform list price equals $588 / ($228 + $588) = 77%

## Cody and Search but seats differ
#### Cody and Search but seats differ

- If Search seats & Cody seats differ, then, the Code Intelligence allocation does not apply. 100% of the seat quantity times price is attributable to Cody or Code Search, assuming we have factored in PS (including one-time fees) & platform fees.
- Cross-sell deals may not specify Code Intelligence Platform, as the contract is reflecting the purchase of Search or Cody. The recognition will operate as if the contract has Code Intelligence Platform if all products have the same seat count. If the seats differ, then 100% of the seat quantity times price is attributable to Cody or Code Search, assuming we have factored in PS (including one-time fees) & platform fees.
If Search seats & Cody seats differ, then, the Code Intelligence allocation does not apply. 100% of the seat quantity times price is attributable to Cody or Code Search, assuming we have factored in PS (including one-time fees) & platform fees.

## Other Software notes
Cross-sell deals may not specify Code Intelligence Platform, as the contract is reflecting the purchase of Search or Cody. The recognition will operate as if the contract has Code Intelligence Platform if all products have the same seat count. If the seats differ, then 100% of the seat quantity times price is attributable to Cody or Code Search, assuming we have factored in PS (including one-time fees) & platform fees.

- If the product is listed as beta,then we will not recognize product-level ARR even if there is a clearly defined seat quantity and price (annual)
- It is likely (especially in the context of repricing) that a deal will have an increase in Cody ARR that corresponds to a reduction in Search ARR. However, this may have a net zero effect in overall contract churn.
#### Other Software notes

If the product is listed as beta,then we will not recognize product-level ARR even if there is a clearly defined seat quantity and price (annual)

It is likely (especially in the context of repricing) that a deal will have an increase in Cody ARR that corresponds to a reduction in Search ARR. However, this may have a net zero effect in overall contract churn.

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