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Revenue from Contracts with Customers | 3 Months Ended
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Mar. 31, 2018
Revenue From Contract With Customer [Abstract] |
Revenues from Contracts with Customers | 30. Revenues from Contracts with Customers The following table presents the Company’s total revenues separated between revenues from contracts with customers and other sources of revenues (in thousands):
|  | Three Months Ended March 31, 2018 |
Revenue from contracts with customers: |  |  |  |
Commissions |  | $ | 668,599 |
Real estate management services |  |  | 96,878 |
Data, software, and post-trade |  |  | 15,099 |
Fees from related parties |  |  | 6,590 |
Total revenue from contracts with customers |  |  | 787,166 |
Other sources of revenue: |  |  |  |
Principal transactions |  |  | 91,918 |
Gains from mortgage banking activities/originations, net |  |  | 38,914 |
Servicing fees |  |  | 28,926 |
Interest income |  |  | 8,748 |
Other revenues |  |  | 974 |
Total revenues |  | $ | 956,646 |
There was no significant impact as a result of applying the new revenue recognition standard, as codified within Accounting Standards Codification (“ASC”) Topic 606, to the Company’s consolidated financial statements for the quarter ended March 31, 2018, except as it relates to the revenue recognition of certain Real Estate segment revenues that were based, in part, on future contingent events and to the presentation of expenses incurred on behalf of customers for certain management services subject to reimbursement. The table below presents the impact to the Company’s condensed consolidated statements of financial condition and condensed consolidated statement of operations as a result of these changes (in thousands):
|  | Three Months Ended March 31, 2018 |
|  | As Reported |  |  | Under Previous U.S. GAAP 1 |  |  | ASC Topic 606 Impact: Increase (decrease) |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Commissions |  |  | 668,599 |  |  |  | 657,982 |  |  |  | 10,617 |
Real estate management and other services |  |  | 96,878 |  |  |  | 78,491 |  |  |  | 18,387 |
Total revenues |  |  | 956,646 |  |  |  | 927,642 |  |  |  | 29,004 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Total compensation and employee benefits |  |  | 600,043 |  |  |  | 594,401 |  |  |  | 5,642 |
Other expenses |  |  | 68,591 |  |  |  | 50,204 |  |  |  | 18,387 |
Total expenses |  |  | 863,195 |  |  |  | 839,166 |  |  |  | 24,029 |
|  | As of March 31, 2018 |
|  | As Reported |  |  | Under Previous U.S. GAAP 1 |  |  | ASC Topic 606 Impact: Increase (decrease) |
Statement of Financial Condition |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Accrued commissions and other receivables, net |  |  | 784,513 |  |  |  | 706,060 |  |  |  | 78,453 |
Total assets |  |  | 6,777,496 |  |  |  | 6,699,043 |  |  |  | 78,453 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Accrued compensation |  |  | 442,871 |  |  |  | 405,477 |  |  |  | 37,394 |
Accounts payable, accrued and other liabilities |  |  | 976,432 |  |  |  | 959,152 |  |  |  | 17,280 |
Total liabilities |  |  | 5,290,789 |  |  |  | 5,236,115 |  |  |  | 54,674 |
1 The amounts reflect each affected financial statement line item as they would have been reported under U.S. GAAP, prior to the adoption of the new revenue standard. The following provides detailed information on the recognition of the Company’s revenues from contracts with customers in accordance with ASU 2014-09 and related amendments: Commissions: BGC Partners derives its commission revenues from securities, commodities and real estate brokerage transactions, whereby the Company connects buyers and sellers in the OTC and exchange markets and assists in the negotiation of the price and other material terms. These transactions result from the provision of service related to executing, settling and clearing transactions for clients. Trade execution and clearing services, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission revenues are recognized at a point in time on the trade-date, when the customer obtains control of the service and can direct the use of, and obtain substantially all of the remaining benefits from the asset. The Company records a receivable between the trade-date and settlement date, when payment is received. Commissions from real estate brokerage transactions are typically recognized at a point in time on the date the lease is signed or the closing of the sale of property. The date the lease is signed or the sale closes represents the transfer of control and satisfaction of the performance obligation as the tenant has been secured or the purchaser identified. In some cases, the payment of the commission is based on certain contingencies being met and may be paid in installments over time. In those cases, the Company does not provide any further services after the first contingency has been met. Therefore, the performance obligation of securing a tenant or obtaining a qualified purchaser or lender has been fulfilled upon reaching the first contingency. Real estate management and other services: The Company provides property and facilities management services along with project management and other consulting services (collectively, “management services”), to customers who may also utilize the Company’s commercial real estate brokerage services. Each type of management service (property, facility and project) generally represents a single performance obligation composed of a series of distinct services that are substantially the same and have the same pattern of transfer. To meet the same pattern of transfer criterion, the Company determined each distinct day of service represents a performance obligation that would be satisfied over time and has the same measure of progress. The customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs. Therefore, revenue is recognized over time using a time-elapsed method to measure progress. Consideration received may be fixed or variable. Fixed consideration is included in the transaction price whereas variable consideration is subject to the revenue constraint and included in the transaction price only to the extent it is probable a significant reversal in the amount of cumulative revenue recognized will not occur. For example, management fees subject to key performance indicators for an annual period are considered variable consideration due to the future contingency that performance indicators would not be met and the Company would be required to return a portion of management fees already received. Accordingly, the entire transaction price, including the element of variable consideration adjusted for any constraints, is recognized over the term of the contracts. In some cases, the Company has determined that it has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date (for example, a service contract in which the Company bills a fixed amount for each hour of service provided). The Company has elected to use the practical expedient whereby an entity may recognize revenue in the amount to which the entity has a right to invoice. In some instances, because project management services can cover many different types of projects and even include phases for a single project that vary in the services delivered, the performance obligation is the completion of a deliverable. In those instances, the satisfaction of the performance obligation occurs at a point in time; upon completion of the deliverable when the customer obtains control). Generally, the fee is due upon delivery and, accordingly, is recognized at that time. The Company incurs expenses on behalf of customers for certain management services subject to reimbursement. The Company concluded that it controls the services provided by a third party on behalf of customers and, therefore, acts as a principal under those contracts. As a result, for these service contracts the Company presents expenses incurred on behalf of customers along with corresponding reimbursement revenue on a gross basis in the Company’s consolidated statement of operations. Data, software and post-trade: Data revenues primarily consist of subscription fees and fees from customized one-time sales provided to customers either directly or through third party vendors. Regarding this revenue stream, the Company determined that software implementation, license usage, and related support services represent a single performance obligation because the combination of these deliverables is necessary for the customer to derive benefit from the data. As such, once implementation is complete, monthly subscription fees are billed in advance and recognized on a straight-line basis over the life of the license period. The Company also provides software customization services contracted through work orders that each represent a separate performance obligation. Revenue is recognized over-time using an output method as a measure of progress. As circumstances change over time, the Company updates its measure of progress to reflect any changes in the outcome of the performance obligation. Such updates are accounted for as a change in accounting estimate. As a practical expedient, when the work-order period is less than 12 months, the Company will recognize revenue upon acceptance from the customer after work is completed. The contract price is fixed and billed to the customer as combination of an upfront fee, progress fees, and a post-delivery fee. Fees from related parties: Fees from related parties consist of charges for back-office services provided to Cantor and its affiliates, including occupancy of office space, utilization of fixed assets, accounting, operations, human resources and legal services and information technology. The services are satisfied over time and are measured using a time-elapsed measure of progress as the customer receives the benefits of the services evenly throughout the term of the contract. The transaction price is considered variable consideration as the level and type of services fluctuate from period to period and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Fees from related parties are determined based on the cost incurred by the Company to perform or provide the service as evidenced by an allocation of employee expenses or a third-party invoice. Net cash settlements between affiliates are generally performed on a monthly basis. Disaggregation of Revenue Refer to Note 29– “Segment and Geographic Information,” for a further discussion on the allocation of revenues to geographic regions. Contract Balances The timing of our revenue recognition may differ from the timing of payment by our customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company’s deferred revenue primarily relates to customers paying advance or billed in advance where the performance obligation has not yet been satisfied. Deferred revenue at March 31, 2018 and January 1, 2018 was $11.4 million and $11.7 million, respectively. During the three months ended March 31, 2018, the Company recognized revenue of $9.3 million that was recorded as deferred revenue at the beginning of the period. Contract Costs The Company capitalizes costs to fulfill contracts associated with different lines of its business where the revenue is recognized at a point in time and the costs are determined to be recoverable. Capitalized cost to fulfill a contract are recognized at the point in time that the related revenue is recognized. At March 31, 2018, there were no capitalized costs recorded to fulfill a contract.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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