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Revenues from Contracts with Customers
 6 Months Ended
May 31, 2022
Revenue from Contract with Customer [Abstract]  
Revenues from Contracts with Customers Revenues from Contracts with Customers
The following table presents our total revenues separated for our revenues from contracts with customers and our other sources of revenues (in thousands):
Three Months Ended 
May 31,		Six Months Ended 
May 31,
2022202120222021
Revenues from contracts with customers:
Commissions and other fees $254,861 $222,643 $484,314 $459,581 
Investment banking601,215 1,000,700 1,546,263 2,004,362 
Asset management fees3,300 2,315 15,869 9,228 
Total revenue from contracts with customers859,376 1,225,658 2,046,446 2,473,171 
Other sources of revenue:
Principal transactions223,357 325,059 483,383 1,116,278 
Revenue from strategic affiliates10,829 12,252 37,811 42,722 
Interest242,420 206,958 455,210 425,979 
Other42,608 66,769 108,399 127,357 
Total revenues$1,378,590 $1,836,696 $3,131,249 $4,185,507 
Revenue from contracts with customers is recognized when, or as, we satisfy our performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring our progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, we consider multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, we consider the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third-parties.
The following provides detailed information on the recognition of our revenues from contracts with customers:
Commissions and Other Fees. We earn commission and other fee revenue by executing, settling and clearing transactions for clients primarily in equity, equity-related and futures products. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade-date. Commissions revenues are generally paid on settlement date and we record a receivable between trade-date and payment on settlement date. We permit institutional customers to allocate a portion of their gross commissions to pay for research products and other services provided by third-parties. The amounts allocated for those purposes are commonly referred to as soft dollar arrangements. We act as an agent in the soft dollar arrangements as the customer controls the use of the soft dollars and directs our payments to third-party service providers on its behalf. Accordingly, amounts allocated to soft dollar arrangements are netted against commission revenues in our Consolidated Statements of Earnings. We also earn investment research fees for the sales of our proprietary investment research when a contract with a client has been identified. The delivery of investment research services represents a distinct performance obligation that is satisfied over time when the performance obligation is to provide ongoing access to a research platform or research analysts, with fees recognized on a straight-line basis over the period in which the performance obligation is satisfied. The performance obligation is satisfied at a point in time when the performance obligation is to provide individual interactions with research analysts or research events, with fees recognized on the interaction date.
We earn account advisory and distribution fees in connection with wealth management services. Account advisory fees are recognized over time using the time-elapsed method as we determined that the customer simultaneously receives and consumes the benefits of investment advisory services as they are provided. Account advisory fees may be paid in advance of a specified service period or in arrears at the end of the specified service period (e.g., quarterly). Account advisory fees paid in advance are initially deferred within Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. Distribution fees are variable and recognized when the uncertainties with respect to the amounts are resolved.
Investment Banking. We provide our clients with a full range of financial advisory and underwriting services. Revenues from financial advisory services primarily consist of fees generated in connection with merger, acquisition and restructuring transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. Fees received prior to the completion of the transaction are deferred within Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. Advisory fees from restructuring engagements are recognized over time using a time elapsed measure of progress as our clients simultaneously receive and consume the benefits of those services as they are provided. A significant portion of the fees we receive for our advisory services are considered variable as they are contingent upon a future event (e.g., completion of a transaction or third-party emergence from bankruptcy) and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services are generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. We recognize a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related expenses, including expenses incurred related to restructuring assignments, are expensed as incurred. All investment banking advisory expenses are recognized within their respective expense category in our Consolidated Statements of Earnings and any expenses reimbursed by our clients are recognized as Investment banking revenues.
Underwriting services include underwriting and placement agent services in both the equity and debt capital markets, including private equity placements, initial public offerings, follow-on offerings and equity-linked securities transactions and structuring, underwriting and distributing public and private debt, including investment grade debt, high yield bonds, leveraged loans, municipal bonds and mortgage-backed and asset-backed securities. Underwriting and placement agent revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the underwriting offering at that point. Costs associated with underwriting transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded, and are recorded on a gross basis within Underwriting costs in our Consolidated Statements of Earnings as we are acting as a principal in the arrangement. Any expenses reimbursed by our clients are recognized as Investment banking revenues.
Asset Management Fees. We earn management and performance fees in connection with investment advisory services provided to various funds and accounts, which are satisfied over time and measured using a time elapsed measure of progress as the customer receives the benefits of the services evenly throughout the term of the contract. Management and performance fees are considered variable as they are subject to fluctuation (e.g., changes in assets under management, market performance) and/ or are contingent on a future event during the measurement period (e.g., meeting a specified benchmark) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Management fees are generally based on month-end assets under management or an agreed upon notional amount and are included in the transaction price at the end of each month when the assets under management or notional amount is known. Performance fees are received when the return on assets under management for a specified performance period exceed certain benchmark returns, “high-water marks” or other performance targets. The performance period related to our performance fees is annual or semi-annual. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met.
Disaggregation of Revenue
The following presents our revenues from contracts with customers disaggregated by major business activity and primary geographic regions (in thousands):
Three Months Ended May 31,Six Months Ended May 31,
2022202120222021
Reportable SegmentReportable SegmentReportable SegmentReportable Segment
Investment
Banking
and Capital
Markets		Asset ManagementTotalInvestment
Banking
and Capital
Markets		Asset ManagementTotalInvestment
Banking
and Capital
Markets		Asset ManagementTotalInvestment
Banking
and Capital
Markets		Asset ManagementTotal
Major business activity:
Investment banking - Advisory$371,760 $— $371,760 $390,508 $— $390,508 $915,529 $— $915,529 $701,947 $— $701,947 
Investment banking - Underwriting229,455 — 229,455 610,192 — 610,192 630,734 — 630,734 1,302,415 — 1,302,415 
Equities (1)251,433 — 251,433 219,855 — 219,855 477,501 — 477,501 453,394 — 453,394 
Fixed income (1)3,428 — 3,428 2,788 — 2,788 6,813 — 6,813 6,187 — 6,187 
Asset management— 3,300 3,300 — 2,315 2,315 — 15,869 15,869 — 9,228 9,228 
Total$856,076 $3,300 $859,376 $1,223,343 $2,315 $1,225,658 $2,030,577 $15,869 $2,046,446 $2,463,943 $9,228 $2,473,171 
Primary geographic region:
Americas$683,804 $3,300 $687,104 $962,556 $2,011 $964,567 $1,620,874 $15,869 $1,636,743 $1,989,472 $8,595 $1,998,067 
Europe106,392 — 106,392 196,891 304 197,195 272,564 — 272,564 360,628 633 361,261 
Asia Pacific65,880 — 65,880 63,896 — 63,896 137,139 — 137,139 113,843 — 113,843 
Total$856,076 $3,300 $859,376 $1,223,343 $2,315 $1,225,658 $2,030,577 $15,869 $2,046,446 $2,463,943 $9,228 $2,473,171 
(1)Revenues from contracts with customers associated with the equities and fixed income businesses primarily represent commissions and other fee revenue.
Refer to Note 17, Segment Reporting, for a further discussion on the allocation of revenues to geographic regions.
Information on Remaining Performance Obligations and Revenue Recognized from Past Performance
We do not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at May 31, 2022. Investment banking advisory fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price at May 31, 2022.
During the three and six months ended May 31, 2022, we recognized $18.9 million and $52.6 million, respectively, compared with $20.9 million and $41.4 million, during the three and six months ended May 31, 2021, respectively, of revenue related to performance obligations satisfied (or partially satisfied) in previous periods, mainly due to resolving uncertainties in variable consideration that was constrained in prior periods. In addition, during the three and six months ended May 31, 2022, we recognized $6.6 million and $10.1 million, respectively, compared with $5.6 million and $8.5 million, during the three and six months ended May 31, 2021, respectively, of revenues primarily associated with distribution services, a portion of which relates to prior periods.
Contract Balances
The timing of our revenue recognition may differ from the timing of payment by our customers. We record a receivable when revenue is recognized prior to payment and we have an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, we record deferred revenue until the performance obligations are satisfied.
Our deferred revenue primarily relates to retainer and milestone fees received in investment banking advisory engagements where the performance obligation has not yet been satisfied. Deferred revenues at May 31, 2022 and November 30, 2021 were $3.0 million and $14.9 million, respectively, which are recorded in Accrued expenses and other liabilities in our Consolidated Statements of Financial Condition. During the three and six months ended May 31, 2022, we recognized revenues of $2.5 million and $13.7 million, respectively, compared with $3.1 million and $5.0 million, during the three and six months ended May 31, 2021, respectively, that were recorded as deferred revenue at the beginning of the periods.
We had receivables related to revenues from contracts with customers of $149.0 million and $232.6 million at May 31, 2022 and November 30, 2021, respectively. We estimate an allowance for credit losses on our investment banking fee receivables using a provisioning matrix based on the shared risk characteristics and historical loss experience for such receivables. In some instances, we may adjust the allowance calculated based on the provision matrix to incorporate a specific allowance based on the unique credit risk profile of a receivable. The provisioning matrix is periodically updated to reflect changes in the underlying portfolio's credit characteristics and most recent historical loss data.
The allowance for credit losses on our investment banking fee receivables for the three and six months ended May 31, 2022 and 2021 is as follows (in thousands):
Three Months Ended 
May 31,		Six Months Ended 
May 31,
2022202120222021
Beginning balance$4,509 $14,011 $4,824 $19,788 
Adjustment for change in accounting principle for current expected credit losses
— — — (3,594)
Bad debt expense, net of reversals499 396 839 1,022 
Charge-offs— (47)(50)(472)
Recoveries collected(138)(1,704)(743)(4,088)
Ending balance (1)$4,870 $12,656 $4,870 $12,656 
(1)The allowance for doubtful accounts balances are substantially all related to mergers and acquisitions and restructuring fee receivables, which include recoverable expense receivables.
Contract Costs
We capitalize costs to fulfill contracts associated with investment banking advisory engagements where the revenue is recognized at a point in time and the costs are determined to be recoverable. Capitalized costs to fulfill a contract are recognized at the point in time that the related revenue is recognized.
At May 31, 2022 and November 30, 2021, capitalized costs to fulfill a contract were $1.5 million and $1.6 million, respectively, which are recorded in Receivables—Fees, interest and other in our Consolidated Statements of Financial Condition. For the three and six months ended May 31, 2022, we recognized expenses of $0.7 million and $1.5 million, respectively, compared with $0.8 million and $1.8 million, during the three and six months ended May 31, 2021, respectively, related to costs to fulfill a contract that were capitalized as of the beginning of the period. There were no significant impairment charges recognized in relation to these capitalized costs during the three and six months ended May 31, 2022 and 2021.