Revenue | Note 5: Revenue On January 1, 2018, the Company adopted and applied Topic 606 and all the related amendments to all contracts using the modified retrospective method. The Company recognized the cumulative effect on the unaudited condensed consolidated balance sheet of applying the new revenue standard as an adjustment to the opening balance of Accumulated deficit of $35.9 million as of January 1, 2018. Comparative information continues to be reported under the accounting standards in effect for periods prior to 2018. The impact to revenue for the three and nine months ended September 30, 2018 was an increase of $123.0 million and $351.4 million , respectively, which included increases of $98.5 million and $302.0 million , respectively, related to reimbursed expenses due to implementation of the updated principal versus agent considerations in Topic 606 and the acceleration in the timing of revenue recognition related to variable consideration primarily for leasing services of $24.5 million and $49.4 million , respectively. Revenue is recognized upon transfer of control of promised services to clients in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company enters into contracts and earns revenue from its Property, facilities and project management, Leasing, Capital markets and Valuation and other service lines. Revenue is recognized net of any taxes collected from customers. A performance obligation is a promise in a contract to transfer a distinct service to the client and is the unit of account in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct service in the contract. Nature of Services Property, facilities and project management Fees earned from the delivery of the Company’s Property, facilities and project management services are recognized over time when earned under the provisions of the related agreements and are generally based on a fixed recurring fee or a variable fee, which may be based on hours incurred, a percentage mark-up on actual costs incurred or a percentage of monthly gross receipts. The Company also may earn additional revenue based on certain qualitative and quantitative performance measures, which can be based on certain key performance indicators. This additional revenue is recognized over time when earned as the performance obligation is satisfied and the fees are not deemed probable of significant reversal in future periods. When accounting for reimbursements of third-party expenses incurred on a client’s behalf, the Company determines whether it is acting as a principal or an agent in the arrangement. When the Company is acting as a principal, the Company’s revenue is reported on a gross basis and comprises the entire amount billed to the client and reported cost of services includes all expenses associated with the client. When the Company is acting as an agent, the Company’s fee is reported on a net basis as revenue for reimbursed amounts is netted against the related expenses. Within Topic 606, control of the service before transfer to the customer is the focal point of the principal versus agent assessments. The Company is a principal if it controls the services before they are transferred to the client. The presentation of revenues and expenses pursuant to these arrangements under either a gross or net basis has no impact on Fee revenue, Net loss or cash flows. Leasing and Capital markets The Company records commission revenue on real estate leases and sales at the point in time when the performance obligation is satisfied, which is generally upon lease signing or transaction closing. Terms and conditions of a commission agreement may include, but are not limited to, execution of a signed lease agreement and future contingencies, including tenant’s occupancy, payment of a deposit or payment of first month’s rent (or a combination thereof). The adoption of Topic 606 resulted in an acceleration of some revenues that are based, in part, on future contingent events. For the revenues related to leasing services, the Company’s performance obligation will typically be satisfied upon execution of a lease and the portion of the commission that is contingent on a future event will likely be recognized earlier if deemed not subject to significant reversal, based on the Company’s estimates and judgments. The acceleration of the timing of revenue recognition will also result in the acceleration of expense relating to the Company’s commission expense. Valuation and other services Valuation and advisory fees are earned upon completion of the service, which is generally upon delivery of a preliminary or final appraisal report. Consulting fees are recognized when earned under the provisions of the client contracts, which is generally upon completion of services. If the Company has multiple contracts with the same customer, the Company assesses whether the contracts are linked or are separate arrangements. The Company considers several factors in this assessment, including the timing of negotiation, interdependence with other contracts or elements and pricing and payment terms. The Company and its customers typically view each contract as a separate arrangement, as each service has standalone value, selling prices of the separate services exist and are negotiated independently and performance of the services is distinct. Contract Balances The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to the contractual right to consideration for completed performance not yet invoiced or able to be invoiced. Contract liabilities are recorded when cash payments are received in advance of performance, including amounts which are refundable. The Company had no asset impairment charges related to contract assets in the periods presented. Significant changes in the contract assets and contract liabilities during the period are as follows (in millions): Contract Assets Balance as of December 31, 2017 $ — Contract assets recognized upon adoption 144.1 Contract assets from revenues earned, not yet invoiced 180.0 Contract assets transferred to accounts receivable (113.4 ) Balance as of September 30, 2018 $ 210.7 Contract Liabilities Balance as of December 31, 2017 $ 46.4 Contract liabilities recognized upon adoption — Contract liabilities recognized for cash received in advance 425.9 Contract liabilities reduced due to revenue recognition criteria being satisfied (413.5 ) Balance as of September 30, 2018 $ 58.8 Before the adoption of Topic 606, the Company had no contract assets recorded. The Company's accounting for contract liabilities (deferred revenue) recorded as of December 31, 2017 was not affected by the adoption of Topic 606. Of the total ending balances as of September 30, 2018 , contract assets of $184.9 million and $25.8 million were recorded as Prepaid expenses and other current assets and Other non-current assets, respectively, in the unaudited condensed consolidated balance sheets. As of September 30, 2018 and December 31, 2017 , the above contract liabilities were recorded in Accounts payable and accrued expenses in the unaudited condensed consolidated balance sheets. Disaggregation of Revenue The following tables disaggregate revenue by reportable segment and service line (in millions): Three Months Ended September 30, 2018 Revenue recognition timing Americas EMEA APAC Total Property, facilities and project management Over time $ 849.3 $ 75.0 $ 292.2 $ 1,216.5 Leasing At a point in time 413.1 67.5 41.4 522.0 Capital markets At a point in time 177.8 40.0 16.5 234.3 Valuation and other At a point in time or over time 35.4 44.4 23.4 103.2 Total revenue $ 1,475.6 $ 226.9 $ 373.5 $ 2,076.0 Nine Months Ended September 30, 2018 Revenue recognition timing Americas EMEA APAC Total Property, facilities and project management Over time $ 2,412.0 $ 252.6 $ 869.6 $ 3,534.2 Leasing At a point in time 1,034.6 174.5 110.4 1,319.5 Capital markets At a point in time 492.8 98.5 59.1 650.4 Valuation and other At a point in time or over time 114.5 125.3 74.1 313.9 Total revenue $ 4,053.9 $ 650.9 $ 1,113.2 $ 5,818.0 Impact of New Revenue Guidance and Financial Statement Line Items The following table compares the reported unaudited condensed consolidated balance sheet as of September 30, 2018 and the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2018 , as a result of the adoption of Topic 606 on January 1, 2018 compared to the pro forma presentation of each respective statement, which assumes the previous guidance remained in effect as of September 30, 2018 (in millions): Balance as of September 30, 2018 Balance Sheet Balance Without Adoption of Topic 606 Adoption Impact As Reported Trade and other receivables $ 1,246.7 $ 53.2 $ 1,299.9 Prepaid expenses and other current assets 189.0 184.9 373.9 Total current assets 2,385.7 238.1 2,623.8 Other non-current assets 474.2 25.8 500.0 Total assets 6,168.5 263.9 6,432.4 Accounts payable and accrued expenses 697.7 50.7 748.4 Accrued compensation 748.2 126.7 874.9 Total current liabilities 1,723.5 177.4 1,900.9 Deferred tax liabilities 92.0 15.9 107.9 Other non-current liabilities 349.0 19.0 368.0 Total liabilities 4,811.0 212.3 5,023.3 Accumulated deficit (1,354.0 ) 51.8 (1,302.2 ) Accumulated other comprehensive loss (98.6 ) (0.2 ) (98.8 ) Total equity 1,357.5 51.6 1,409.1 Total liabilities and shareholders’ equity 6,168.5 263.9 6,432.4 Total reported assets increased by $263.9 million due to a $184.9 million increase in Prepaid expenses and other assets and a $25.8 million increase in Other non-current assets in the unaudited condensed consolidated balance sheets resulting from new contract assets recognized from acceleration of timing of revenue recognition, but contractually not able to be invoiced and $53.2 million due to an increase in client reimbursed receivables included in Trade and other receivables from contracts accounted for on a gross basis. Total reported liabilities increased by $212.3 million primarily due to a $126.7 million increase related to accrued commissions and other employee related benefit payables related to the associated direct commissions resulting from the acceleration of the timing of revenues recognized, $53.2 million primarily related to the increase in client reimbursed payables related to contracts accounted for on a gross basis and $15.9 million for the net deferred tax liabilities as well as $19.0 million for Other non-current liabilities related to long-term accrued commissions. Three Months Ended September 30, 2018 Statement of Operations Balance Without Adoption of Topic 606 Adoption Impact As Reported Revenue $ 1,953.0 $ 123.0 $ 2,076.0 Cost of services 1,572.9 114.3 1,687.2 Total costs and expenses 1,950.7 114.3 2,065.0 Operating income 2.3 8.7 11.0 Loss before income taxes (90.3 ) 8.7 (81.6 ) (Benefit) provision for income taxes (34.2 ) 1.3 (32.9 ) Net loss $ (56.1 ) $ 7.4 $ (48.7 ) Nine Months Ended September 30, 2018 Statement of Operations Balance Without Adoption of Topic 606 Adoption Impact As Reported Revenue $ 5,466.6 $ 351.4 $ 5,818.0 Cost of services 4,393.2 332.0 4,725.2 Total costs and expenses 5,523.2 332.0 5,855.2 Operating (loss) income (56.6 ) 19.4 (37.2 ) Loss before income taxes (241.8 ) 19.4 (222.4 ) (Benefit) provision for income taxes (53.0 ) 3.5 (49.5 ) Net loss $ (188.8 ) $ 15.9 $ (172.9 ) Total reported Net loss was $7.4 million and $15.9 million lower than the pro forma statement of operations for the three and nine months ended September 30, 2018 , respectively. The decrease in Net loss was due to the acceleration of the timing of revenue recognition in the Leasing service line. The adoption of Topic 606 had offsetting impacts within the cash flows from operating activities of the unaudited condensed consolidated statement of cash flows with no net impact on the Company’s cash flows from operations. Practical Expedients and Exemptions The Company incurs incremental costs to obtain new contracts across the majority of its service lines. As the amortization period of those expenses is 12 months or less, the Company expenses those incremental costs of obtaining the contracts in accordance with Topic 606. Remaining performance obligations represent the aggregate transaction prices for contracts where the performance obligations have not yet been satisfied. In accordance with Topic 606, the Company does not disclose unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) variable consideration for services performed as a series of daily performance obligations, such as those performed within the Property, facilities and project management services lines. Performance obligations within these businesses represent a significant portion of the Company's contracts with customers not expected to be completed within 12 months. |