Revenue Recognition | REVENUE RECOGNITION On January 1, 2018, we adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 will be presented under Topic 606, while prior period amounts will not be adjusted and will continue to be reported under the accounting standards in effect for the period presented. We recorded a net increase to opening retained earnings of $4.5 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606. Changes in accounting policies as a result of adopting Topic 606 and nature of goods The Company recognizes revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service period. Customer billings delivered in advance of services being rendered are recorded as deferred revenue and recognized over the service period. The Company generates revenue from the following sources: Recruitment packages . Recruitment package revenues are derived from the sale to recruiters and employers of a combination of job postings and access to a searchable database of candidates on the Dice, ClearanceJobs, eFinancialCareers, Rigzone, and Hcareers websites. Certain of the Company’s arrangements include multiple performance obligations, which primarily consists of the ability to post jobs and access to a searchable database of candidates. The Company determines the units of accounting for multiple performance obligations in accordance with Topic 606. Specifically, the Company considers a performance obligation as a separate unit of accounting if it has value to the customer on a standalone basis. The Company’s arrangements do not include a general right of return. Services to customers buying a package of available job postings and access to the database are delivered over the same period and revenue is recognized ratably over the length of the underlying contract, typically from one to 12 months. The separation of the package into two deliverables results in no change in revenue recognition since delivery of the two services occurs over the same time period. Advertising revenue. Advertising revenue is recognized over the period in which the advertisements are displayed on the websites or at the time a promotional e-mail is sent out to the audience. Classified revenue. Classified job posting revenues are derived from the sale of job postings to recruiters and employers. A job posting is the ability to list a job on the website for a specified time period. Revenue from the sale of classified job postings is recognized ratably over the length of the contract or the period of actual usage. Data services revenue. Access to the Company’s database of energy industry data is provided to customers for a fee. Data services revenue is recognized ratably over the length of the underlying contract, typically from one to 12 months. The data services business, called RigLogix, was sold February 20, 2018. Career fair and recruitment event booth rentals . Career fair and recruitment event revenues are derived from renting booth space to recruiters and employers. Revenue from these sales is recognized when the career fair or recruitment event is held. Disaggregation of revenue Our brands serve various economic professions, such as technology, financial, hospitality, and oil & gas. The following table provides information about disaggregated revenue by brand and includes a reconciliation of the disaggregated revenue with reportable segments (in thousands): Three Months Ended March 31, 2018 Tech-Focused Corporate & Other Total Dice $ 23,282 $ — $ 23,282 ClearanceJobs 4,804 — 4,804 Dice Europe 1,292 — 1,292 eFinancial Careers 8,563 — 8,563 Hcareers — 3,393 3,393 Rigzone — 1,525 1,525 BioSpace — 212 212 Total $ 37,941 $ 5,130 $ 43,071 Revenue for periods ending prior to January 1, 2018 have not been presented under Topic 606. Contract Balances The following table provides information about opening and closing balances of receivables and contract liabilities from contracts with customers as required under Topic 606 (in thousands): As of March 31, 2018 As of January 1, 2018 Receivables $ 27,386 $ 38,769 Short-term contract liabilities (deferred revenue) 75,142 83,810 Long-term contract liabilities (deferred revenue) 2,978 — We receive payments from customers based upon contractual billing schedules; accounts receivable is recorded when customers are invoiced per the contractual billings schedules. As the Company's standard payment terms are less than one year, the Company elected the practical expedient. As a result, the Company did not consider the effects of a significant financing component. Contract liabilities include customer billings delivered in advance of performance under the contract, and associated revenue is realized when services are rendered under the contract. Receivables increase due to customer billings and decrease by cash collected from customers along with business divestitures. Included in January 1, 2018 is $ 0.7 million of receivables related to businesses sold during the three months ended March 31, 2018. Contract liabilities increase due to customer billings and are decreased as performance obligations are satisfied under the contracts. Included in January 1, 2018 is $ 2.3 million of short-term contract liabilities related to businesses sold during the three months ended March 31, 2018. During the three months ended March 31, 2018, the Company recognized the following revenues as a result of changes in the contract liability balances in the respective periods (in thousands): Three Months Ended March 31, 2018 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $ 31,984 Transaction price allocated to the remaining performance obligations Under the guidance of Topic 606, the following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands): Remainder of 2018 2019 2020 Total Tech-focused $ 63,709 $ 7,453 $ 258 $ 71,420 Corporate & Other 6,301 399 — 6,700 Total $ 70,010 $ 7,852 $ 258 $ 78,120 Contract acquisition costs In connection with the adoption of Topic 606, we are required to capitalize certain contract acquisition costs consisting primarily of commissions paid when contracts are signed. As allowed for by the practical expedient, the Company is using a portfolio approach for contract acquisition costs, which allows the new revenue guidance to be applied to a portfolio of contracts with similar characteristics. As a result, the Company has applied the portfolio approach to new business contracts and recurring or remaining business contracts. The Company reasonably expects that the effects of applying the portfolio approach would not differ materially from applying Topic 606 at the individual contract level. As of January 1, 2018, the date we adopted Topic 606, we capitalized $6.1 million in contract acquisition costs related to contracts that were not completed. The cumulative effect for contract acquisition costs was computed based on contracts in force as of December 31, 2017 using the average commission rates on both new business sales contracts, to be amortized over approximately two years , and the remaining sales contracts to be amortized over approximately one year. For costs incurred to obtain new business sales contracts, we will record these costs over an average customer life, which was determined using customer renewal rates; for the remaining sales contracts, we will record these costs over the weighted average contract term. For the three months ended March 31, 2018, the Company recorded $2.2 million of expense related to the amortization of contract acquisition costs and there was no impairment loss incurred. During the three months ended March 31, 2018, $ 0.3 million of contract acquisition costs were removed due to the sale of BioSpace and RigLogix. In accordance with Topic 606, the impact of adoption to our condensed consolidated statements of operations was as follows: Three Months Ended March 31, 2018 (in thousands, except per share amounts) As Reported Balance Without Adoption of Topic 606 Effect of Change- Higher (Lower) Revenues $ 43,071 $ 42,924 $ 147 Operating expenses $ 40,861 $ 42,129 $ (1,268 ) Operating income $ 6,849 $ 5,434 $ 1,415 Net income $ 3,503 $ 2,442 $ 1,061 Basic earnings per share $ 0.07 $ 0.05 $ 0.02 Diluted earnings per share $ 0.07 $ 0.05 $ 0.02 In accordance with Topic 606, the impact of adoption to our condensed consolidated balance sheets was as follows: As of March 31, 2018 (in thousands) As Reported Balance Without Adoption of Topic 606 Effect of Change-Higher (Lower) ASSETS Capitalized contract costs $ 7,202 $ — $ 7,202 Total assets $ 295,022 $ 287,820 $ 7,202 LIABILITIES AND STOCKHOLDERS' EQUITY Deferred income taxes $ 9,643 $ 7,987 $ 1,656 Total liabilities $ 149,871 $ 148,215 $ 1,656 Stockholders equity Accumulated earnings $ 67,764 $ 62,218 $ 5,546 Total stockholders' equity $ 145,151 $ 139,605 $ 5,546 Total liabilities & stockholders' equity $ 295,022 $ 287,820 $ 7,202 In accordance with Topic 606, the impact of adoption to our condensed consolidated statements of cash flows was as follows: Three Months Ended March 31, 2018 As Reported Balance Without Adoption of Topic 606 Effect of Change-Higher (Lower) Cash flows from operating activities: Net income $ 3,503 $ 2,442 $ 1,061 Adjustments to reconcile net income to net cash flows from operating activities: Deferred income taxes $ 82 $ (255 ) $ 337 Capitalized contract costs $ (1,398 ) $ — $ (1,398 ) Net cash flows from operating activities $ 6,918 $ 6,918 $ — |