| Revenue | Revenue Significant Accounting Policy We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (ASC Topic 606), which we adopted on January 1, 2018, using the modified retrospective method. Revenue is measured based on the consideration specified in a contract with a customer. Most of our contracts with customers contain transaction prices with fixed consideration, however, some contracts may contain variable consideration in the form of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. This can result in recognition of revenue over time as we perform services or at a point in time when the deliverable is transferred to the customer, depending on an evaluation of the criteria for over time recognition in ASC Topic 606. Further details regarding our revenue recognition for various revenue streams are discussed below. Nature of goods and services Over 90% of our revenue is derived from services provided to our customers for training, consulting, technical, engineering and other services. Less than 10% of our revenue is derived from various other offerings including custom magazine publications and assembly of glovebox portfolios for automotive manufacturers, licenses of software and other intellectual property, and software as a service (SaaS) arrangements. Our primary contract vehicles are time-and-materials, fixed price (including fixed-fee per transaction) and cost-reimbursable contracts. Each contract has different terms based on the scope, deliverables and complexity of the engagement, requiring us to make judgments and estimates about recognizing revenue. Under time-and-materials and cost-reimbursable contracts, the contractual billing schedules are based on the specified level of resources we are obligated to provide. Revenue under these contract types are recognized over time as services are performed as the client simultaneously receives and consumes the benefits provided by our performance throughout the engagement. The time and materials incurred for the period is the measure of performance and, therefore, revenue is recognized in that amount. For fixed price contracts which typically involve a discrete project, such as development of training content and materials, design of training processes, software implementation, or engineering projects, the contractual billing schedules are not necessarily based on the specified level of resources we are obligated to provide. These discrete projects generally do not contain milestones or other measures of performance. The majority of our fixed price contracts meet the criteria in ASC Topic 606 for over time revenue recognition. For these contracts, revenue is recognized using a percentage-of-completion method based on the relationship of costs incurred to total estimated costs expected to be incurred over the term of the contract. We believe this methodology is a reasonable measure of proportional performance since performance primarily involves personnel costs and services provided to the customer throughout the course of the projects through regular communications of progress toward completion and other project deliverables. In addition, the customer is required to pay us for the proportionate amount of our fees in the event of contract termination. A small portion of our fixed price contracts do not meet the criteria in ASC Topic 606 for over time revenue recognition. For these projects, we defer revenue recognition until the performance obligation is satisfied, which is generally when the final deliverable is provided to the client. The direct costs related to these projects are capitalized and then recognized as cost of revenue when the performance obligation is satisfied. For fixed price contracts, when total direct cost estimates exceed revenues, the estimated losses are recognized immediately. The use of the percentage-of-completion method requires significant judgment relative to estimating total contract costs, including assumptions relative to the length of time to complete the project, the nature and complexity of the work to be performed, and anticipated changes in estimated salaries and other costs. Estimates of total contract costs are continuously monitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. When revisions in estimated contract revenues and costs are determined, such adjustments are recorded in the period in which they are first identified. Adjustments to our fixed price contracts in the aggregate resulted in a net increases to revenue of $0.4 million and $0.3 million for the three months ended September 30, 2019 and 2018 , respectively, and net increases to revenue of $1.3 million for both of the nine months ended September 30, 2019 and 2018 , respectively. For certain fixed-fee per transaction contracts, such as delivering training courses or conducting workshops, revenue is recognized during the period in which services are delivered in accordance with the pricing outlined in the contracts. For certain fixed-fee per transaction and fixed price contracts in which the output of the arrangement is measurable, such as for the shipping of publications and print materials, revenue is recognized at the point in time at which control is transferred which is upon delivery. Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue-producing transaction, that we collect from a customer, are excluded from revenue. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 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. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. As of September 30, 2019 , we had $338.1 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 90 percent of our remaining performance obligations as revenue within the next twelve months. We did not apply any of the practical expedients permitted by ASC Topic 606 in determining the amount of our performance obligations as of September 30, 2019 . Revenue by Category The following series of tables presents our revenue disaggregated by various categories (dollars in thousands). Three Months Ended September 30, Workforce Excellence Business Transformation Services Consolidated 2019 2018 2019 2018 2019 2018 Revenue by type of service: Managed learning services $ 55,901 $ 51,387 $ — $ — $ 55,901 $ 51,387 Engineering & technical services 26,589 29,129 — — 26,589 29,129 Sales enablement — — 33,826 19,944 33,826 19,944 Organizational development — — 22,689 23,106 22,689 23,106 $ 82,490 $ 80,516 $ 56,515 $ 43,050 $ 139,005 $ 123,566 Revenue by geographic region: Americas $ 58,469 $ 56,064 $ 43,625 $ 35,380 $ 102,094 $ 91,444 Europe Middle East Africa 21,721 21,153 12,560 8,906 34,281 30,059 Asia Pacific 9,558 8,205 4,753 109 14,311 8,314 Eliminations (7,258 ) (4,906 ) (4,423 ) (1,345 ) (11,681 ) (6,251 ) $ 82,490 $ 80,516 $ 56,515 $ 43,050 $ 139,005 $ 123,566 Revenue by client market sector: Automotive $ 2,354 $ 2,738 $ 32,143 $ 20,531 $ 34,497 $ 23,269 Financial & Insurance 24,450 22,364 2,890 2,692 27,340 25,056 Manufacturing 9,001 7,558 4,945 3,734 13,946 11,292 Energy / Oil & Gas 7,910 9,113 1,488 1,188 9,398 10,301 U.S. Government 9,282 7,673 2,002 2,102 11,284 9,775 U.K. Government 4,654 4,456 — — 4,654 4,456 Information & Communication 2,909 3,315 1,961 2,330 4,870 5,645 Aerospace 8,644 6,705 1,317 1,160 9,961 7,865 Electronics Semiconductor 3,229 3,719 389 241 3,618 3,960 Life Sciences 5,091 4,892 1,321 1,932 6,412 6,824 Other 4,966 7,983 8,059 7,140 13,025 15,123 $ 82,490 $ 80,516 $ 56,515 $ 43,050 $ 139,005 $ 123,566 Nine Months Ended September 30, Workforce Excellence Business Transformation Services Consolidated 2019 2018 2019 2018 2019 2018 Revenue by type of service: Managed learning services $ 159,972 $ 156,244 $ — $ — $ 159,972 $ 156,244 Engineering & technical services 83,027 82,800 — — 83,027 82,800 Sales enablement — — 115,754 71,593 115,754 71,593 Organizational development — — 69,138 71,652 69,138 71,652 $ 242,999 $ 239,044 $ 184,892 $ 143,245 $ 427,891 $ 382,289 Revenue by geographic region: Americas $ 170,953 $ 158,935 $ 142,581 $ 120,814 $ 313,534 $ 279,749 Europe Middle East Africa 66,418 70,253 36,680 27,408 103,098 97,661 Asia Pacific 24,393 23,400 16,583 298 40,976 23,698 Eliminations (18,765 ) (13,544 ) (10,952 ) (5,275 ) (29,717 ) (18,819 ) $ 242,999 $ 239,044 $ 184,892 $ 143,245 $ 427,891 $ 382,289 Revenue by client market sector: Automotive $ 6,176 $ 8,614 $ 111,855 $ 73,134 $ 118,031 $ 81,748 Financial & Insurance 62,847 67,522 7,784 9,010 70,631 76,532 Manufacturing 25,395 25,621 17,029 11,606 42,424 37,227 Energy / Oil & Gas 27,972 27,769 4,290 3,318 32,262 31,087 U.S. Government 28,768 20,704 5,891 6,742 34,659 27,446 U.K. Government 13,066 14,889 — — 13,066 14,889 Information & Communication 10,372 11,027 6,338 6,953 16,710 17,980 Aerospace 22,198 21,619 3,350 2,408 25,548 24,027 Electronics Semiconductor 11,444 11,228 983 521 12,427 11,749 Life Sciences 14,799 9,743 5,060 7,143 19,859 16,886 Other 19,962 20,308 22,312 22,410 42,274 42,718 $ 242,999 $ 239,044 $ 184,892 $ 143,245 $ 427,891 $ 382,289 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled revenue (contract assets), and deferred revenue (contract liabilities) on the condensed consolidated balance sheet. Amounts charged to our clients become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. When billings occur after the work has been performed, such unbilled amounts will generally be billed and collected within 60 to 120 days but typically no longer than over the next twelve months. When we advance bill clients prior to the work being performed, generally, such amounts will be earned and recognized in revenue within the next twelve months. These assets and liabilities are reported on the condensed consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the nine -month period ended September 30, 2019 were not materially impacted by any other factors. We recognized revenue of $1.5 million and $2.3 million for the three months ended September 30, 2019 and 2018 , respectively, and $17.2 million and $18.6 million for the nine months ended September 30, 2019 and 2018 , respectively, that was included in the contract liability balance at the beginning of the year and primarily represented revenue from services performed during the current period for which we received advance payment from clients in a prior period. |
