Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2022

ID Experts Holdings, Inc. and Subsidiary [Member]

Disaggregation of Revenue [Line Items]

Revenue from Contracts with Customers

3: Revenue from Contracts with Customers

Performance Obligations

The Company’s primary performance obligations under breach services contracts are notification services and combined call center and monitoring services. These were determined by reviewing all of the services provided within the Company’s contracts and establishing whether each service is capable of being distinct and capable of being distinct within the context of the contract. With each performance obligation, the customer can benefit from the service either on its own or together with other resources readily available and it is separately identifiable from other promises in the contract.

The following table summarizes breach revenue from contracts with customers for the three and six months ended June 30, 2022 (in thousands):

	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Notification services	$	4,460	$	7,444
Call center and monitoring services		23,630		47,012
Total breach services	$	28,090	$	54,456

Notification Services

The Company’s notification and mailing services include project management, postage, and setup costs to develop notification templates that will be printed and mailed to the customer’s impacted population. These notifications are typically printed by the Company’s third-party printers and mailed via USPS. The Company recognizes revenue for notification services upfront upon the date that the notifications are mailed, which typically coincides with the call center start date. The Company is deemed to be the principal in these transactions as it is primarily responsible for fulfilling the obligation, has full discretion in price setting, and controls the notification services before the resulting notifications are transferred to the customer.

Call Center and Identity Protection Services

Call center services consist of fees charged to setup an incident-specific call center and website for the population of impacted individuals. The call center component of the Company’s services serves as a facilitation of its identity protection services and revenue is recognized ratably over the term of the arrangement, which typically lasts for 15 months total (3 months for the call center/enrollment period plus 12 months of identity protection services). Identity Protection services consist of fees charged to continually monitor individuals’ credit and identity. Additional services are bundled with identity protection services such as non-credit reporting, alerts, and insurance. The Company typically invoices for these services upfront for fixed price contracts. For variable price contracts, the Company typically invoices the call center services upfront and the notification services and identity protection services on a monthly basis, as incurred, over the enrollment period. The timing and content of billings may vary based on individual contracts, but such variances usually only occur with the largest breach contracts.

Membership Services

For the three and six months ended June 30, 2022, revenue from consumer membership services was 4% of total revenue. For the three and six months ended June 30, 2022, no single consumer membership services customer exceeded 10% of total revenue.

Timing of Revenue Recognition

As a result of the adoption of ASC 606, the timing of recognition of certain performance obligations has changed. For example, most breach services contracts contain distinct performance obligations and now have a portion of revenue recognized up front, whereas these arrangements were previously recognized over time. In addition, allocating the transaction price on a relative SSP basis under the new guidance has generally resulted in an acceleration of revenue of point-in-time performance obligations.

Contract Costs

During the three and six months ended June 30, 2022, the Company recognized $4.1 million and $6.7 million of amortization expense of capitalized contract costs, respectively. Contract costs include fulfillment costs and costs to obtain contracts. There were no impairment losses recognized for the three and six months ended June 30, 2022.

Remaining Performance Obligations

Remaining performance obligations represent contracted revenue that has not been recognized, which include contract liabilities and amounts that will be billed and recognized as revenue in future periods. As of June 30, 2022, the Company had $93.1 million of remaining performance obligations. The approximate percentages expected to be recognized as revenue in the future are as follows (in thousands, except percentages):
 

	0-12 Months			13-24 Months			Over 24 Months			Total Remaining Performance Obligations
Breach services		98	%		1	%		1	%	$	92,508
Consumer membership services		100	%		0	%		0	%		635
Total		98	%		1	%		1	%	$	93,143