Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

2. Revenue from Contracts with Customers

In the first quarter of 2018, we adopted the comprehensive update to revenue recognition guidance Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), which replaced the previous standard ("ASC 605"), using the modified retrospective approach, applied to contracts that were not completed as of the adoption date. Under ASC 606, revenue is recognized when a company transfers the promised goods or services to customers in an amount that reflects the consideration that is expected to be received for those goods and services. The key areas of impact on our consolidated financial statements include:

•Revenue recognition for our Travel Network and Hospitality Solutions businesses did not change significantly. The definition of a performance obligation for Travel Network under the new guidance impacts the calculation for our booking fee cancellation reserve, which resulted in a beginning balance sheet adjustment.

•Our Airline Solutions business is primarily impacted by ASC 606 due to the following:

–Under ASC 605, we recognized revenue related to license fee and maintenance agreements ratably over the life of the contract. Under ASC 606, revenue for license fees is recognized upon delivery of the license and ongoing maintenance services are to be recognized ratably over the life of the contract. For existing open agreements, this change resulted in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements.

–Allocation of contract revenues among various products and solutions, and the timing of the recognition of those revenues, are impacted by agreements with tiered pricing or variable rate structures that do not correspond with the goods or services delivered to the customer. For existing open agreements, this change resulted in a beginning balance sheet adjustment and reduced revenue in subsequent years from these agreements.

•Capitalization of incremental contract acquisition costs (such as sales commissions), and recognition of these costs over the customer benefit period resulted in the recognition of an asset on our balance sheet and impacted our Airline Solutions and Hospitality Solutions businesses.

Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with ASC 605. The impacts described above resulted in a net reduction to our opening retained deficit as of January 1, 2018 of approximately $102 million (net of tax, $78 million) with a corresponding increase primarily in current and long-term unbilled receivables, contract assets, other assets and other accrued liabilities.

Contract Balances

Revenue recognition for a significant portion of our revenue coincides with normal billing terms, including Travel Network's transactional revenues, and Airline Solutions' and Hospitality Solutions' SaaS and hosted revenues. Timing differences among revenue recognition, unconditional rights to bill, and receipt of contract consideration may result in contract assets or contract liabilities.

The following table presents our assets and liabilities with customers as of December 31, 2019 and December 31, 2018 (in thousands):


Account	Consolidated Balance Sheet Location	December 31, 2019		December 31, 2018
Contract assets and customer advances and discounts⁽¹⁾	Prepaid expenses and other current assets / other assets, net	$	105,499	$	79,268
Trade and unbilled receivables, net	Accounts receivable, net	539,806		501,467
Long-term trade unbilled receivables, net	Other assets, net	38,250		50,467
Contract liabilities	Deferred revenues / other noncurrent liabilities	167,832		165,858

_______________________________

(1) Includes contract assets of $6 million and $4 million for December 31, 2019 and December 31, 2018, respectively.

During the year ended December 31, 2019, we recognized revenue of approximately $61 million from contract liabilities that existed as of January 1, 2019. Our long-term trade unbilled receivables, net relate to license fees billed ratably over the contractual period and recognized when the customer gains control of the software. We evaluate collectability of our accounts receivable based on a combination of factors and record reserves as reflected in Note 1. Summary of Business and Significant Accounting Policies.

Revenue

The following table presents our revenues disaggregated by business (in thousands):


	Year Ended
	December 31, 2019		December 31, 2018
Air	$	2,338,602	$	2,284,419
Lodging, Ground and Sea	370,652		350,152
Other	173,408		171,623
Total Travel Network	2,882,662		2,806,194
SabreSonic Passenger Reservation System	506,579		501,085
Commercial and Operations Solutions⁽¹⁾	328,485		312,751
Other	5,274		8,911
Total Airline Solutions	840,338		822,747
SynXis Software and Services	257,612		240,583
Other	35,268		32,496
Total Hospitality Solutions	292,880		273,079
Eliminations	(40,892)		(35,064)
Total Sabre Revenue	$	3,974,988	$	3,866,956

_______________________________

(1) Includes license fee revenue recognized upon delivery to the customer of $34 million and $27 million for the years ended December 31, 2019 and December 31, 2018, respectively.

We may occasionally recognize revenue in the current period for performance obligations partially or fully satisfied in the previous periods resulting from changes in estimates for the transaction price, including any changes to our assessment of whether an estimate of variable consideration is constrained. For the year ended December 31, 2019, the impact on revenue recognized in the current period, from performance obligations partially or fully satisfied in the previous period, is immaterial.

We recognize revenue under long-term contracts that primarily includes variable consideration based on transactions processed. A majority of our consolidated revenue is recognized as a stand-ready performance obligation with the amount recognized based on the invoiced amounts for services performed, known as right to invoice revenue recognition. Certain of our contracts, primarily in the Airlines Solutions business, contain minimum transaction volumes, which in many instances are not considered substantive as the customer is expected to exceed the minimum in the contract. Unearned performance obligations primarily consist of deferred revenue for fixed implementation fees and future product implementations, which are included in deferred revenue and other noncurrent liabilities in our consolidated balance sheet. We have not disclosed the performance obligation related to contracts containing minimum transaction volume, as it represents a subset of our business, and therefore would not be meaningful in understanding the total future revenues expected to be earned from our long-term contracts. See Note 1. Summary of Business and Significant Accounting Policies regarding revenue recognition of our various revenue streams for more information.

Contract Acquisition Costs and Capitalized Implementation Costs

We incur contract costs in the form of acquisition costs and implementation costs. Contract acquisition costs are related to new contracts with our customers in the form of sales commissions based on the estimated contract value. We incur contract implementation costs to implement new customer contracts under our SaaS revenue model. We periodically assess contract costs for recoverability, and our assessment resulted in impairments of approximately $2 million and $4 million for the year ended December 31, 2019 and 2018, respectively. See Note 1. Summary of Business and Significant Accounting Policies for an overview of our policy for capitalization of acquisition and implementation costs.


	Year Ended
	December 31, 2019		December 31, 2018
Contract acquisition costs:
Beginning balance	$	21,298	$	19,353
Additions	9,378		7,924
Amortization	(7,081)		(6,404)
Other	—		425
Ending balance	$	23,595	$	21,298

Capitalized implementation costs:
Beginning balance	$	189,448	$	194,501
Additions	28,588		39,168
Amortization	(39,444)		(37,904)
Impairment	(2,405)		(4,013)
Other	(219)		(2,304)
Ending balance	$	175,968	$	189,448