Receivables, Contract Assets, Contract Liabilities and Performance Obligations

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Receivables, Contract Assets, Contract Liabilities and Performance Obligations

Contract Balances

The following table provides information about receivables and contract liabilities as of December 31, 2023 and 2022 (in thousands):


	December 31,
	2023		2022
Current receivables, which are included in “Accounts receivable, net”	$	3,568,290	$	3,272,371
Contract assets, net	120,518		7,909
Long-term accounts receivable	412,666		160,818
Long-term contract assets	$	132,780	$	—
Contract liabilities, which are included in “Accrued expenses and other current liabilities” and “Other liabilities”	$	107,217	$	102,057

Significant changes in the contract assets balances during the years ended December 31, 2023 and 2022 are as follows (in thousands):


	Contract Assets
Balances at December 31, 2021	$	4,757
Reclassification of beginning contract assets to receivables, as a result of rights to consideration becoming unconditional	(4,757)
Contract assets recognized, net of reclassification to receivables	7,909
Balances at December 31, 2022	$	7,909
Contract assets acquired through business combination	246,666
Reclassification of beginning contract assets to receivables, as a result of rights to consideration becoming unconditional	(33,638)
Contract assets recognized, net of reclassification to receivables	51,350
Balances at December 31, 2023	$	272,287

Contract assets consist of amounts the Company is entitled to for the resale of third-party consumption-based services, prior to payment becoming unconditional. In these transactions, the Company invoices clients for the gross amount of consideration it is responsible to collect,

including amounts ultimately passed on to the third-party service providers. As of December 31, 2023 contract assets, net of allowances, were $253,298,000.

Gross contract assets by our internal risk ratings as of December 31, 2023 are summarized as follows (in thousands):


	Contract assets
Low risk	$	46,280
Moderate risk	56,850
High risk	169,157
Total contract assets	$	272,287

Significant changes in the liabilities balances during the years ended December 31, 2023 and 2022 are as follows (in thousands):



	Contract Liabilities
Balances at December 31, 2021	$	116,067
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied	(77,334)
Cash received in advance and not recognized as revenue	63,324
Balances at December 31, 2022	$	102,057
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied	(67,351)
Cash received in advance and not recognized as revenue	72,511
Balances at December 31, 2023	$	107,217

Transaction price allocated to the remaining performance obligations

The following table includes estimated net sales related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2023 that are expected to be recognized in the future (in thousands):


	Services
2024	$	94,689
2025	33,174
2026	17,538
2027 and thereafter	7,543
Total remaining performance obligations	$	152,944

With the exception of remaining performance obligations associated with our OneCall Support Services contracts which are included in the table above regardless of original duration, remaining performance obligations that have original expected durations of one year or less are not included in the table above. Amounts not included in the table above have an average original expected duration of nine months. Additionally, for our time and material services contracts, whereby we have the right to consideration from a client in an amount that corresponds directly with the value to the client of our performance completed to date, we recognized revenue in the amount to which we have a right to invoice as of December 31, 2023 and do not disclose

information about related remaining performance obligations in the table above. Our open time and material contracts at December 31, 2023, have an average expected duration of 24 months.

The majority of our product backlog historically has been and continues to be open cancellable purchase orders. We do not believe that backlog as of any particular date is predictive of future results, therefore we do not include performance obligations under open cancellable purchase orders, which do not qualify for revenue recognition as of December 31, 2023, in the table above.

Assets recognized for costs of obtaining a contract with a customer

Sales commissions are the only significant incremental costs incurred to obtain contracts with our clients. The majority of our contracts are completed within a one-year performance period, and for contracts with a specified term of one year or less, we recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. We record sales commissions on contracts with performance periods that exceed one year as an asset and amortize the asset to expense over the related contract performance period. As of December 31, 2023 and 2022, the related asset balance was $11,892,384 and $13,478,732, respectively. The expense is expected to be recognized over the next 57 months.