Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2024

Significant Accounting Policies

Revenue Recognition

Revenue Recognition

The Company accounts for revenue by first evaluating whether a performance obligation exists. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. Revenue is measured as the amount of consideration the Company expect to receive in exchange for transferring goods or providing services. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of the Company’s material sources of revenue are derived from contracts with customers, primarily relating to the provision of business and transaction processing services within each of the Company’s segments. The Company does not have any significant extended payment terms, as payment is received shortly after goods are delivered or services are provided.

Nature of Services

The Company’s primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services, but that are substantially the same, and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. The Company’s obligation to its customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. The Company allocates variable fees to the single performance obligation charged to the distinct service period in which the Company has the contractual right to bill under the contract.

Disaggregation of Revenues

The Company is organized into three segments: Information & Transaction Processing Solutions (“ITPS”), Healthcare Solutions (“HS”), and Legal & Loss Prevention Services (“LLPS”) (See Note 13 – Segment and Geographic Area Information). The following tables disaggregate revenue from contracts by segment and by geographic region for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,
	2024												2023
		ITPS	​		HS	​		LLPS	​		Total	​		ITPS	​		HS	​		LLPS	​		Total
U.S.A.	$	115,667		$	62,935		$	25,878		$	204,480		$	137,498		$	63,608		$	24,340		$	225,446
EMEA		36,031			—			—			36,031			42,294			—			—			42,294
Other		5,142			—			—			5,142			5,198			—			—			5,198
Total	$	156,840		$	62,935		$	25,878		$	245,653		$	184,990		$	63,608		$	24,340		$	272,938

	Six Months Ended June 30,
	2024												2023
		ITPS	​		HS	​		LLPS	​		Total	​		ITPS	​		HS	​		LLPS	​		Total
U.S.A.	$	246,388		$	127,787		$	43,697		$	417,872		$	283,523		$	126,650		$	41,210		$	451,383
EMEA		76,077			—			—			76,077			85,072			—			—			85,072
Other		10,515			—			—			10,515			10,103			—			—			10,103
Total	$	332,980		$	127,787		$	43,697		$	504,464		$	378,698		$	126,650		$	41,210		$	546,558

Contract Balances

The following table presents contract assets, contract liabilities and contract costs recognized at June 30, 2024, December 31, 2023 and January 1, 2023:

	June 30,		December 31,		January 1,
	2024		2023		2023
Accounts receivable, net	$	61,501	$	76,893	$	101,616
Deferred revenues		15,166		13,107		17,585
Customer deposits		27,898		23,838		16,955
Costs to obtain and fulfill a contract		1,459		1,400		1,674

The following table describes the changes in the allowance for expected credit losses for the six months ended June 30, 2024 (all related to accounts receivables):

Balance at January 1, 2024 of the allowance for expected credit losses	$	6,628
Provision for expected loss		14,683
Write-off charged against the allowance		(13,872)
Recoveries collected		(594)
Foreign currency exchange rate adjustment		(32)
Balance at June 30, 2024 of the allowance for expected credit losses	$	6,813

Accounts receivable, net includes $23.1 million and $23.9 million as of June 30, 2024 and December 31, 2023, respectively, representing amounts not yet billed to customers. The Company has accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers.

Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where the Company received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. The Company recognized revenue of $3.4 million and $7.8 million during the three and six months ended June 30, 2024 that had been deferred as of December 31, 2023. The Company recognized revenue of $8.0 million and $14.8 million during the three and six months ended June 30, 2023 that had been deferred as of January 1, 2023. The Company recognized revenue of $17.3 million during the year ended December 31, 2023 that had been deferred as of January 1, 2023.

Costs incurred to obtain and fulfill contracts are deferred and presented as part of intangible assets, net and expensed on a straight-line basis over the estimated benefit period. The Company recognized $0.2 million and $0.2 million of amortization for these costs for the three months ended June 30, 2024 and 2023, respectively, within depreciation and amortization expense in the Company’s condensed consolidated statements of operations. The Company recognized $0.5 million and $0.4 million of amortization for these costs for the six months ended June 30, 2024 and 2023, respectively, within depreciation and amortization expense in the Company’s condensed consolidated statements of operations. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or fulfillment and can be separated into two principal categories: contract commissions and fulfillment costs. Applying the practical expedient in ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred, if the amortization period would have been one year or less. These costs are included in selling, general and administrative expenses. The effect of applying this practical expedient was not material.

Customer deposits consist primarily of amounts received from customers in advance for postage. These advanced postage deposits are used to cover the costs associated with postage, with the corresponding postage revenue being recognized as services are performed.

Performance Obligations

At the inception of each contract, the Company assesses the goods and services promised in its contracts and identify each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of the Company’s business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes.

Certain of the Company’s contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company estimates its expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. The Company also uses the adjusted market approach whereby it estimates the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, the Company considers the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of the Company’s software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained.

When evaluating the transaction price, the Company analyzes, on a contract-by-contract basis, all applicable variable consideration. The nature of the Company’s contracts gives rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. The Company estimates these amounts based on the expected amount to be provided to customers and reduce revenues recognized. The Company does not anticipate significant changes to its estimates of variable consideration.

The Company includes reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue.

Transaction Price Allocated to the Remaining Performance Obligations

In accordance with optional exemptions available under GAAP, the Company does not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less, and (b) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of the Company’s contracts. The Company has certain non-cancellable contracts where the Company receives a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of June 30, 2024 in each of the future periods below:

Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations
Remainder of 2024	$	6,152
2025		7,987
2026		4,629
2027		2,554
2028		1,519
2029 and thereafter		—
Total	$	22,841