Revenue Recognition

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

Contract Balances

The following table presents the components of our contract balances:

	As of
	September 30, 2020		December 31, 2019
Trade accounts receivable and contract assets, net:
Sales and services	$	162,390	$	152,632
Leasing	4,065		4,016
Total trade accounts receivable	166,455		156,648
Contract assets	43,896		63,758
Allowance for doubtful accounts	(19,401)		(23,777)
Total trade accounts receivable and contract assets, net	$	190,950	$	196,629
Contract liabilities:
Current	$	89,622	$	101,060
Non-current	11,663		10,572
Total contract liabilities	$	101,285	$	111,632

The following table presents the revenue recognized in the Condensed Consolidated Statements of Operations that was previously included within contract liabilities:

	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Revenue	$	3,794	$	19,490	$	63,581	$	67,263

The following table presents the activity in our allowance for doubtful accounts:

	For the nine months ended September 30,
	2020		2019
Balance at beginning of period	$	23,777	$	16,604
Credit losses (1)	12,253		22,031
Deductions	(15,367)		(13,979)
Foreign currency translation	(1,262)		596
Balance at end of period	$	19,401	$	25,252

(1) The impact of adopting ASC 326 on January 1, 2020 was a net decrease to our allowance for doubtful accounts largely driven by a $13.4 million reclassification to Other current assets, net and Other non-current assets, net, offset by a $2.9 million adjustment to Accumulated earnings (losses).

Contract Acquisition Costs

The following table presents the activity in our contract acquisition costs, net:

	For the nine months ended September 30,
	2020		2019
Balance at beginning of period	$	113,592	$	114,306
Additions	68,589		71,651
Amortization expense	(75,429)		(72,412)
Foreign currency translation	(2,984)		(1,012)
Balance at end of period	$	103,768	$	112,533

We recognized amortization expenses related to contract acquisition costs of $25.7 million and $24.7 million for the three months ended September 30, 2020 and 2019, respectively.

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2020, the remaining performance obligations for our customer contracts with original expected durations of more than one year was $677.9 million. We expect to recognize 38.9% of our remaining performance obligations of these contracts as revenue in the next twelve months. This amount excludes agreements with consumer customers in our Hughes segment, our leasing arrangements and agreements with certain customers under which collectability of all amounts due through the term of contracts is uncertain.

Disaggregation of Revenue

Geographic Information

The following table presents our revenue from customer contracts disaggregated by primary geographic market and by segment:

	Hughes		ESS		Corporate and Other		Consolidated Total
For the three months ended September 30, 2020
North America	$	392,950	$	4,402	$	2,298	$	399,650
South and Central America	38,578		—		40		38,618
Other	35,234		—		—		35,234
Total revenue	$	466,762	$	4,402	$	2,338	$	473,502
For the three months ended September 30, 2019
North America	$	389,264	$	4,098	$	4,323	$	397,685
South and Central America	31,747		—		106		31,853
Other	42,724		—		—		42,724
Total revenue	$	463,735	$	4,098	$	4,429	$	472,262
For the nine months ended September 30, 2020
North America	$	1,160,288	$	13,233	$	6,753	$	1,180,274
South and Central America	106,495		—		232		106,727
Other	111,633		—		—		111,633
Total revenue	$	1,378,416	$	13,233	$	6,985	$	1,398,634
For the nine months ended September 30, 2019
North America	$	1,129,491	$	11,873	$	13,934	$	1,155,298
South and Central America	89,005		—		349		89,354
Other	142,423		—		—		142,423
Total revenue	$	1,360,919	$	11,873	$	14,283	$	1,387,075

Nature of Products and Services

The following tables presents our revenue disaggregated by the nature of products and services and by segment for the three and nine months ended September 30, 2020 and 2019:

	Hughes		ESS		Corporate and Other		Consolidated Total
For the three months ended September 30, 2020
Services and other revenue:
Services	$	409,119	$	2,804	$	1,037	$	412,960
Lease revenue	10,673		1,598		1,301		13,572
Total services and other revenue	419,792		4,402		2,338		426,532
Equipment revenue:
Equipment	29,387		—		—		29,387
Design, development and construction services	16,375		—		—		16,375
Lease revenue	1,208		—		—		1,208
Total equipment revenue	46,970		—		—		46,970
Total revenue	$	466,762	$	4,402	$	2,338	$	473,502
For the three months ended September 30, 2019
Services and other revenue:
Services	$	385,477	$	2,736	$	1,733	$	389,946
Lease revenue	12,533		1,362		2,696		16,591
Total services and other revenue	398,010		4,098		4,429		406,537
Equipment revenue:
Equipment	21,106		—		—		21,106
Design, development and construction services	42,328		—		—		42,328
Lease revenue	2,291		—		—		2,291
Total equipment revenue	65,725		—		—		65,725
Total revenue	$	463,735	$	4,098	$	4,429	$	472,262

	Hughes		ESS		Corporate and Other		Consolidated Total
For the nine months ended September 30, 2020
Services and other revenue:
Services	$	1,198,816	$	8,133	$	3,318	$	1,210,267
Lease revenue	32,898		5,100		3,667		41,665
Total services and other revenue	1,231,714		13,233		6,985		1,251,932
Equipment revenue:
Equipment	72,744		—		—		72,744
Design, development and construction services	70,600		—		—		70,600
Lease revenue	3,358		—		—		3,358
Total equipment revenue	146,702		—		—		146,702
Total revenue	$	1,378,416	$	13,233	$	6,985	$	1,398,634
For the nine months ended September 30, 2019
Services and other revenue:
Services	$	1,147,868	$	7,953	$	5,185	$	1,161,006
Lease revenue	37,967		3,920		9,098		50,985
Total services and other revenue	1,185,835		11,873		14,283		1,211,991
Equipment revenue:
Equipment	77,663		—		—		77,663
Design, development and construction services	93,254		—		—		93,254
Lease revenue	4,167		—		—		4,167
Total equipment revenue	175,084		—		—		175,084
Total revenue	$	1,360,919	$	11,873	$	14,283	$	1,387,075

Lease Revenue

The following table presents our lease revenue by type of lease:

	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Sales-type lease revenue:
Revenue at lease commencement	$	1,208	$	2,291	$	3,358	$	4,167
Interest income	14		206		178		716
Total sales-type lease revenue	1,222		2,497		3,536		4,883
Operating lease revenue	13,558		16,385		41,487		50,269
Total lease revenue	$	14,780	$	18,882	$	45,023	$	55,152

Substantially all of our net investment in sales-type leases consisted of lease receivables totaling $10.6 million and $6.5 million as of September 30, 2020 and December 31, 2019, respectively.

The following table presents future operating lease payments to be received as of September 30, 2020:

	Amounts
Year ending December 31,
2020 (remainder)	$	11,977
2021	37,729
2022	34,207
2023	32,100
2024	29,771
2025 and beyond	127,485
Total lease payments	$	273,269

The following table presents amounts for assets subject to operating leases, which are included in Property and equipment, net:

	As of
	September 30, 2020						December 31, 2019
	Cost		Accumulated Depreciation		Net		Cost		Accumulated Depreciation		Net
Customer premises equipment	$	1,537,274	$	(1,198,056)	$	339,218	$	1,377,914	$	(1,043,431)	$	334,483
Satellites	104,620		(36,591)		68,029		104,620		(31,360)		73,260
Real estate	48,275		(16,855)		31,420		46,930		(16,048)		30,882
Total	$	1,690,169	$	(1,251,502)	$	438,667	$	1,529,464	$	(1,090,839)	$	438,625

The following table presents depreciation expense for assets subject to operating leases, which is included in Depreciation and amortization:

	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Customer premises equipment	$	54,059	$	45,546	$	154,625	$	138,197
Satellites	1,744		1,802		5,231		5,277
Real estate	245		232		710		697
Total	$	56,048	$	47,580	$	160,566	$	144,171