Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company generated 74% and 75% of its revenue from U.S. domestic sales for the three months ended March 31, 2020 and March 31, 2019, respectively. The remaining 26% and 25% of revenue was generated from non-U.S. sales for the three months ended March 31, 2020 and March 31, 2019, respectively.

For the three months ended March 31, 2020, the Company recognized 73% of its revenue over time as control of the services and goods transferred to the customer, and 27% at a point in time, when the customer obtained control of the promised goods. For the three months ended March 31, 2019, the Company recognized 76% of its revenue over time, and the remaining 24% at a point in time.

Contract Assets. As of March 31, 2020, the Company recognized a contract asset of $5.7 million related to a contract at a Kaplan International business, which is included in Deferred Charges and Other Assets. The Company expects to recognize an additional $9.7 million related to this performance obligation over the next 2 years. As of December 31, 2019, the contract asset was $5.3 million.

Deferred Revenue. The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance, including amounts which are refundable. The following table presents the change in the Company’s deferred revenue balance:

	As of
	March 31, 2020		December 31, 2019		%
(in thousands)					Change
Deferred revenue	$	332,659	$	359,048	(7)

The majority of the change in the deferred revenue balance is related to the cyclical nature of services at the Kaplan international division and currency translation adjustments. During the three months ended March 31, 2020, the Company recognized $188.7 million related to the Company’s deferred revenue balance as of December 31, 2019.

Revenue allocated to remaining performance obligations represents deferred revenue amounts that will be recognized as revenue in future periods. As of March 31, 2020, Kaplan Test Preparation’s (KTP) deferred revenue balance related to certain medical and nursing qualifications with an original contract length greater than twelve months was $9.3 million. KTP expects to recognize 61% of this revenue over the next twelve months and the remainder thereafter.

Costs to Obtain a Contract. The following table presents changes in the Company’s costs to obtain a contract asset:

(in thousands)	Balance at Beginning of Period		Costs associated with new contracts		Less: Costs amortized during the period			Other			Balance at End of Period
2020	$	31,020	$	13,237	$	(16,869	)	$	(1,819	)	$	25,569

The majority of other activity is related to currency translation adjustments during the three months ended March 31, 2020.