Revenues | 3. Revenues Revenue Recognition On January 1, 2018, the Company adopted Topic 606 and, as such, recognizes revenue when performance obligations are satisfied by transferring promised goods or services to customers in an amount the Company expects to receive in exchange for those goods or services. The Company enters into contracts that can include various combinations of its offerings, which are generally capable of being distinct and accounted for as separate performance obligations. The Company’s offerings consist of IT Deal Alert TM IT Deal Alert provides a suite of products that leverages detailed purchase intent data that we collect about end-user IT organizations. Through proprietary scoring methodologies, we use this insight to help our customers identify and prioritize accounts. We provide this insight through Priority Engine TM TM TM TM TM Core Online consists primarily of demand solutions, brand solutions, and custom content. Demand solutions offerings provide the Company’s customers the opportunity to maximize return on investment by capturing sales leads from the distribution and promotion of content to its audience. Demand solutions may contain the following components: white papers, webcasts, podcasts, videocasts and virtual trade shows, and content sponsorship, which the Company may utilize at its discretion. Brand solutions provide the Company’s customers to target audiences of IT and business professionals actively researching information related to their products and services. This can be accomplished through on-network or off-network branding as well as through the hosting of microsites. The Company will at times create custom content, such as white papers, case studies, webcasts, or videos, to our customers’ specifications through its Custom Content team. Revenue from demand solutions is primarily recognized when the transfer of control occurs. For certain demand solutions, the Company generates revenue on a cost per lead basis and the transfer of control occurs at the point in time each lead is generated. Certain of the contracts within demand solutions are duration-based campaigns which, in the event of customer cancellation, provide the Company with an enforceable right to a proportional payment for the portion of the campaign based on services provided. Accordingly, revenue from duration-based campaigns are recognized using a time-based measure of progress, which the Company believes best depicts how it satisfies its performance obligations in these arrangements as control is continuously transferred throughout the contract period. Revenue from brand solutions is primarily recognized when the placement of the branding impression appears. Revenue from microsites is recognized ratably over the life of the contract. The Company’s offerings can be sold separately but the Company’s contracts often involve multiple offerings. The Company evaluates all contracts with customers at inception to determine whether they contain separate performance obligations. If the contract contains a single performance obligation, the entire transaction price is allocated to that performance obligation. If the contract contains multiple performance obligations, the transaction price is allocated to each performance obligation based on a relative standalone selling price. The Company has concluded that each of the performance obligations described above are distinct. To determine standalone selling price for the individual performance obligations in the arrangement, the Company uses an estimate of the observable selling prices in separate transactions. The Company establishes best estimates considering multiple factors including, but not limited to, class of client, size of transaction, available inventory, pricing strategies and market conditions. The Company uses a range of amounts to estimate stand-alone selling price when it sells the goods and services separately and needs to determine whether a discount is to be allocated based upon the relative stand-alone selling price to the various goods and services. Disaggregation of Revenue The following table depicts the disaggregation of revenue according to categories consistent with how the Company evaluates its financial performance. International revenue consists of international geo-targeted campaigns, which are campaigns targeted at an audience of members outside of North America. Three Months Ended June 30, Percent Six Months Ended June 30, Percent 2018 2017 Change 2018 2017 Change ($ in thousands) ($ in thousands) Total by Geographic Area: North America: North America IT Deal Alert $ 10,389 $ 8,441 23 % $ 20,395 $ 16,609 23 % North America Core Online 10,798 8,993 20 % 19,641 17,070 15 % Total North America 21,187 17,434 22 % 40,036 33,679 19 % International: International IT Deal Alert 3,658 3,215 14 % 7,266 5,418 34 % International Core Online 6,627 6,015 10 % 11,469 10,976 4 % Total International 10,285 9,230 11 % 18,735 16,394 14 % Total Online by Product: IT Deal Alert: North America IT Deal Alert 10,389 8,441 23 % 20,395 16,609 23 % International IT Deal Alert 3,658 3,215 14 % 7,266 5,418 34 % Total IT Deal Alert 14,047 11,656 21 % 27,661 22,027 26 % Core Online: North America Core Online 10,798 8,993 20 % 19,641 17,070 15 % International Core Online 6,627 6,015 10 % 11,469 10,976 4 % Total Core Online 17,425 15,008 16 % 31,110 28,046 11 % Other — — — — 168 (100 )% Total Revenues $ 31,472 $ 26,664 18 % $ 58,771 $ 50,241 17 % Deferred Revenue and Contract Balances Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to the Company’s contracts with customers. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. Deferred revenue is included in contract liabilities on the accompanying Consolidated Balance Sheets and was $2.5 million and $4.9 million at June 30, 2018 and December 31, 2017, respectively. Additionally, certain customers may receive credits, which are accounted for as a material right. The Company estimates these amounts based on the expected amount of future services to be provided to customers and allocates a portion of the transaction price to these material rights. The Company recognizes these material rights as the material rights are exercised. The resulting amounts included in contract liabilities on the accompanying Consolidated Balance Sheets were $2.8 million and $2.7 million at June 30, 2018 and December 31, 2017, respectively. During the first six months of 2018, revenues of $2.5 million were recognized that had been included in the contract liabilities balance at December 31, 2017. Contract Liabilities Year-to-Date Activity (in thousands) Balance at December 31, 2017 $ 4,088 Deferral of revenue 3,650 Recognition of previously unearned revenue (2,473 ) Balance at June 30, 2018 $ 5,265 The Company reduced its accounts receivable by $3.5 million from $29.6 million to $26.1 million as of January 1, 2018 as a result of the adoption of Topic 606. There was a corresponding reduction of $3.5 million to its deferred revenue balance from $7.6 million to $4.1 million as of January 1, 2018 as a result of the adoption of Topic 606. Payment terms and conditions vary by contract type, although terms generally include requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not contain a financing component as they are generally less than one year. The Company increased its allowance for doubtful accounts by $0.5 million and had direct write-offs of $0.4 million, net of recoveries, during the six months ended June 30, 2018. The Company elected to apply the following practical expedients and exemptions: • The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. • The Company expenses, as incurred, contract costs consisting of sales commissions and sales bonuses because the amortization period of the contract asset that would have otherwise been recognized would have been one year or less. |