Revenues

Disaggregation of Revenues

The following tables summarize revenues from contracts with clients (in millions):



	Year ended December 31, 2018
	Servicing Software		Origination Software		Software Solutions		Data and Analytics		Corporate and Other				Total
Software and hosting solutions	$	716.3	$	108.8	$	825.1	$	29.8	$	—			$	854.9
Professional services	82.2		44.5		126.7		2.1		(2.5		)	(1)	126.3
Data solutions	—		—		—		119.7		—				119.7
Other	0.5		9.7		10.2		2.9		—				13.1
Revenues	$	799.0	$	163.0	$	962.0	$	154.5	$	(2.5	)		$	1,114.0

_______________________________________________________


(1)	Revenues for Corporate and Other represent deferred revenue purchase accounting adjustments recorded in accordance with GAAP.

Our Software Solutions segment offers leading software and hosting solutions that facilitate and automate many of the mission critical business processes across the homeownership lifecycle. These solutions primarily consist of processing and workflow management software applications. Our servicing software solutions primarily include our core servicing software solution that automates loan servicing, including loan setup and ongoing processing, customer service, accounting, reporting to the secondary mortgage market and investors and web-based workflow information systems. Our origination software solutions primarily include our solutions that automate and facilitate the origination of mortgage loans and provide an interconnected network allowing the various parties and systems associated with lending transactions to exchange data quickly and efficiently. Professional services consists of pre-implementation and post-implementation support and services and are primarily billed on a time and materials basis. Professional services may also include dedicated teams provided as part of agreements with software and hosting solutions clients.

Our Data and Analytics segment offers data and analytics solutions to the mortgage, real estate and capital markets verticals. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, behavioral models, a multiple listing service software solution and other data solutions.

Effect of Adopting ASC 606

The primary effect of adopting ASC 606 relates to the timing differences attributable to the effect of straight-line revenue recognition due to escalating billings related to contractual minimums, certain distinct license arrangements and timing of revenue recognition for professional services. Certain agreements within our origination software solutions with distinct services that are substantially the same and provided ratably over the agreement term resulted in straight-line revenue recognition due to escalating billings related to contractual minimums. Further, we identified timing differences related to recognizing the license portion of certain distinct license arrangements within our origination software solutions and Data and Analytics segment upon delivery rather than ratably over the license term. Finally, we identified timing differences related to revenue recognition for certain distinct professional services for certain solutions within our servicing and origination software solutions, which are recognized in the period the professional services are performed compared to deferred and recognized over the remaining contract term under the previous standard. Moreover, fees for certain post-implementation professional services related to minor customization of hosted software solutions that are not distinct from the hosted software solutions are deferred and recognized over the remaining hosted software contract term rather than over the period the professional services are performed as required under the previous standard.

In addition, based on our analysis of contract acquisition and fulfillment costs, we did not identify a material change to our current practice for capitalizing such costs; however, we amortize certain capitalized contract costs over a longer time period for certain contracts. Based on the requirements of the new standard, we consider the explicit term of the contract with the client, expected renewals and the rate of change related to our solutions in determining the amortization period of our deferred contract costs.

Opening Balance Sheet Adjustment on January 1, 2018

As a result of applying the modified retrospective method to adopt ASC 606, the following amounts on our Consolidated Balance Sheet were adjusted as of January 1, 2018 to reflect the cumulative effect adjustment to the opening balance of Retained earnings (in millions):



	As reported December 31, 2017		Adjustments for ASC 606 adoption			Adjusted January 1, 2018
Trade receivables, net	$	201.8	$	(6.2	)	$	195.6
Prepaid expenses and other current assets	44.6		11.8			56.4
Receivables from related parties	18.1		(3.7		)	14.4
Computer software, net	416.8		1.8			418.6
Other non-current assets	240.1		16.6			256.7
Total assets	3,655.9		20.3			3,676.2

Deferred revenues (current)	59.6		(1.9		)	57.7
Deferred revenues (non-current)	100.7		6.8			107.5
Deferred income taxes	224.6		4.2			228.8
Total liabilities	1,947.1		9.1			1,956.2
Retained earnings	201.4		11.2			212.6
Total equity	1,708.8		11.2			1,720.0
Total liabilities and equity	3,655.9		20.3			3,676.2

Effect of ASC 606 as of December 31, 2018 and for the Year Ended December 31, 2018

The following table summarizes the effect of adopting ASC 606 on our Consolidated Balance Sheet (in millions):



	As reported December 31, 2018		Effect of ASC 606 adoption			Amounts without adoption of ASC 606 December 31, 2018
Trade receivables, net	$	172.3	$	6.9		$	179.2
Prepaid expenses and other current assets	67.3		(14.4		)	52.9
Receivables from related parties	6.2		4.8			11.0
Computer software, net	405.6		(3.7		)	401.9
Other non-current assets	286.9		(24.2		)	262.7
Total assets	3,653.4		(30.6		)	3,622.8

Deferred revenues (current)	52.9		4.1			57.0
Deferred revenues (non-current)	106.8		(4.3		)	102.5
Deferred income taxes	220.9		(8.1		)	212.8
Total liabilities	1,866.9		(8.3		)	1,858.6
Retained earnings	381.1		(22.3		)	358.8
Total equity	1,786.5		(22.3		)	1,764.2
Total liabilities and equity	3,653.4		(30.6		)	3,622.8

The following tables summarize the effect of adopting ASC 606 on our Consolidated Statement of Earnings and Comprehensive Earnings (in millions):



	Year ended December 31, 2018
	As reported		Effect of ASC 606 adoption			Amounts without adoption of ASC 606
Revenues	$	1,114.0	$	(11.6	)	$	1,102.4

Operating expenses	625.4		4.5			629.9
Depreciation and amortization	217.0		(1.1		)	215.9
Income tax expense	37.7		(3.9		)	33.8
Net earnings	168.5		(11.1		)	157.4

Earnings per share:
Basic	$	1.14	$	(0.07	)	$	1.07
Diluted	$	1.14	$	(0.08	)	$	1.06

The following table summarizes the effect of adopting ASC 606 on our Consolidated Statement of Cash Flow (in millions):



	Year ended December 31, 2018
	As reported			Effect of ASC 606 adoption			Amounts without adoption of ASC 606
Cash flows from operating activities:
Net earnings	$	168.5		$	(11.1	)	$	157.4
Certain adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	217.0			(1.1		)	215.9
Deferred income taxes, net	(7.5		)	(3.9		)	(11.4		)
Changes in assets and liabilities:
Trade and other receivables, including receivables from related parties	44.5			(1.8		)	42.7
Prepaid expenses and other assets	(41.5		)	6.3			(35.2		)
Deferred contract costs	(44.8		)	4.5			(40.3		)
Deferred revenues	(6.4		)	4.7			(1.7		)
Net cash provided by operating activities	$	435.5		$	(2.4	)	$	433.1
Cash flows from investing activities:
Additions to computer software	$	(73.1	)	$	2.4		$	(70.7	)
Net cash used in investing activities	$	(144.1	)	$	2.4		$	(141.7	)

Transaction Price Allocated to Future Performance Obligation

ASC 606 allows for the use of certain practical expedients, which we elected and applied to measure our future performance obligations as of December 31, 2018. As a result, our disclosure of transaction price allocated to these future performance obligations excludes the following:


•	Volume-based fees in excess of contractual minimums and other usage-based fees to the extent they are part of a single performance obligation and meet the variable allocation criteria in ASC 606;


•	Performance obligations that are part of a contract with an original expected duration of one year or less; and


•	Transactional fees based on a fixed fee per transaction when we have the right to invoice once we have completed the performance obligation.

As of December 31, 2018, the aggregate amount of the transaction price that is allocated to our future performance obligations was approximately $2.1 billion and is expected to be recognized as follows: 24% by December 31, 2019, 64% by December 31, 2021, 88% by December 31, 2023 and the rest thereafter.