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Revenue Recognition | 9 Months Ended
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Sep. 30, 2020
Revenue From Contract With Customer [Abstract] |
Revenue Recognition | 6. REVENUE RECOGNITION Disaggregation of Revenue The following tables disaggregate our revenue by major source for the quarters and years to date ended September 30, 2020 and 2019 (dollars in thousands):
|  | For the Quarter Ended September 30, 2020 |  |  | For the Quarter Ended September 30, 2019 |
|  | CTU |  |  | AIU (3) |  |  | Corporate and Other(4) |  |  | Total |  |  | CTU |  |  | AIU |  |  | Corporate and Other(4) |  |  | Total |
Tuition |  | $ | 93,071 |  |  | $ | 67,394 |  |  | $ | - |  |  | $ | 160,465 |  |  | $ | 90,256 |  |  | $ | 56,383 |  |  | $ | - |  |  | $ | 146,639 |
Technology fees |  |  | 5,085 |  |  |  | 2,439 |  |  |  | - |  |  |  | 7,524 |  |  |  | 4,789 |  |  |  | 2,360 |  |  |  | - |  |  |  | 7,149 |
Other miscellaneous fees(1) |  |  | 290 |  |  |  | 192 |  |  |  | - |  |  |  | 482 |  |  |  | 384 |  |  |  | 119 |  |  |  | - |  |  |  | 503 |
Total tuition and fees |  |  | 98,446 |  |  |  | 70,025 |  |  |  | - |  |  |  | 168,471 |  |  |  | 95,429 |  |  |  | 58,862 |  |  |  | - |  |  |  | 154,291 |
Other revenue(2) |  |  | 539 |  |  |  | 23 |  |  |  | 93 |  |  |  | 655 |  |  |  | 609 |  |  |  | 45 |  |  |  | 14 |  |  |  | 668 |
Total revenue |  | $ | 98,985 |  |  | $ | 70,048 |  |  | $ | 93 |  |  | $ | 169,126 |  |  | $ | 96,038 |  |  | $ | 58,907 |  |  | $ | 14 |  |  | $ | 154,959 |
|  | For the Year to Date Ended September 30, 2020 |  |  | For the Year to Date Ended September 30, 2019 |
|  | CTU |  |  | AIU (3) |  |  | Corporate and Other(4) |  |  | Total |  |  | CTU |  |  | AIU |  |  | Corporate and Other(4) |  |  | Total |
Tuition |  | $ | 284,826 |  |  | $ | 204,943 |  |  | $ | - |  |  | $ | 489,769 |  |  | $ | 273,777 |  |  | $ | 171,954 |  |  | $ | - |  |  | $ | 445,731 |
Technology fees |  |  | 15,367 |  |  |  | 7,729 |  |  |  | - |  |  |  | 23,096 |  |  |  | 12,828 |  |  |  | 7,129 |  |  |  | - |  |  |  | 19,957 |
Other miscellaneous fees(1) |  |  | 985 |  |  |  | 514 |  |  |  | - |  |  |  | 1,499 |  |  |  | 1,271 |  |  |  | 339 |  |  |  | - |  |  |  | 1,610 |
Total tuition and fees |  |  | 301,178 |  |  |  | 213,186 |  |  |  | - |  |  |  | 514,364 |  |  |  | 287,876 |  |  |  | 179,422 |  |  |  | - |  |  |  | 467,298 |
Other revenue(2) |  |  | 1,588 |  |  |  | 93 |  |  |  | 110 |  |  |  | 1,791 |  |  |  | 1,774 |  |  |  | 137 |  |  |  | 44 |  |  |  | 1,955 |
Total revenue |  | $ | 302,766 |  |  | $ | 213,279 |  |  | $ | 110 |  |  | $ | 516,155 |  |  | $ | 289,650 |  |  | $ | 179,559 |  |  | $ | 44 |  |  | $ | 469,253 |
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| (1) | Other miscellaneous fees include student activity fees and graduation fees.
| (2) | Other revenue primarily includes contract training revenue and bookstore sales.
(3) AIU includes revenue related to the Trident acquisition commencing on the March 2, 2020 date of acquisition.
| (4) | Revenue recorded within Corporate and Other relates to certain bookstore sales and closed campuses which are now reported within this category as well as revenue not related to campus operations.
Performance Obligations Our revenue, which is derived primarily from academic programs taught to students who attend our institutions, is generally segregated into two categories: (1) tuition and fees, and (2) other. Tuition and fees represent costs to our students for educational services provided by our institutions. Our institutions charge tuition and fees at varying amounts, depending on the institution, the type of program and specific curriculum. Our institutions bill students a single charge that covers tuition, fees and required program materials, such as textbooks and supplies, which we treat as a single performance obligation. Generally, we bill student tuition at the beginning of each academic term, and recognize the tuition as revenue on a straight-line basis over the academic term, which includes any applicable externship period. As part of a student’s course of instruction, certain fees, such as technology fees and graduation fees, are billed to students. These fees are earned over the applicable term and are not considered separate performance obligations. Other revenue, which consists primarily of contract training revenue and bookstore sales, is billed and recognized as goods are delivered or services are performed. Contract training revenue results from individual training courses that are stand-alone courses and not part of a degree or certificate program. Bookstore sales are primarily initiated by the student and are not included in the enrollment agreement at the onset of a student’s entrance to the institution. These types of sales constitute a separate performance obligation from classroom instruction. Our institutions’ academic year is generally at least 30 weeks in length but varies both by institution and program of study and is divided by academic terms. Academic terms are determined by regulatory requirements mandated by the federal government and/or applicable accrediting body, which also vary by institution and program. Academic terms are determined by start dates, which vary by institution and program and are generally 8 - 12 weeks in length. Contract Assets For each term, the portion of tuition and fee payments received from students but not yet earned is recorded as deferred revenue and reported as a current liability on our condensed consolidated balance sheets, as we expect to earn these revenues within the next year. A contract asset is recorded for each student for the current term for which they are enrolled for the amount charged for the current term that has not yet been received as payment and to which we do not have the unconditional right to receive payment because the student has not reached the point in the student’s current academic term at which the amount billed is no longer refundable to the student. On a student by student basis, the contract asset is offset against the deferred revenue balance for the current term and the net deferred revenue balance is reflected within current liabilities on our condensed consolidated balance sheets. For AIU’s Trident programs, students are billed as they register for courses, including courses related to future terms. Any billings for future terms would meet the definition of a contract asset as we do not have the unconditional right to receive payment as the academic term has not yet started. Contract assets related to future terms are offset against the deferred revenue associated with the respective future term. Due to the short-term nature of our academic terms, the contract asset balance which exists at the beginning of each quarter will no longer be a contract asset at the end of that quarter, with the exception of the contract assets associated with future terms. The decrease in contract asset balances are a result of one of the following: it becomes a student receivable balance once a student reaches the point in a student’s academic term where the amount billed is no longer refundable to the student; a refund is made to withdrawn students for the portion entitled to be refunded under each institutions’ refund policy; we receive funds to apply against the contract asset balance; or a student makes a change to the number of classes they are enrolled in which may cause an adjustment to their previously billed amount. As of the end of each quarter, a new contract asset is determined on a student by student basis based on the most recently started term and a student’s progress within that term as compared to the date at which the student is no longer entitled to a refund under each institution’s refund policy. Contract assets associated with future terms remain as contract assets until the academic term begins and the student reaches the point in that academic term that they are no longer entitled to a refund. The amount of contract assets which are being offset with deferred revenue balances as of September 30, 2020 and December 31, 2019 were as follows (dollars in thousands):
|  | As of |
|  | September 30, 2020 |  |  | December 31, 2019 |
Gross deferred revenue |  | $ | 55,056 |  |  | $ | 63,204 |
Gross contract assets |  |  | (25,753 | ) |  |  | (38,557 | )
Deferred revenue, net |  | $ | 29,303 |  |  | $ | 24,647 |
Deferred Revenue Changes in our deferred revenue balances for the quarters and years to date ended September 30, 2020 and 2019 were as follows (dollars in thousands):
|  | For the Quarter Ended |  |  | For the Quarter Ended |
|  | September 30, 2020 |  |  | September 30, 2019 |
|  | CTU |  |  | AIU |  |  | Total |  |  | CTU |  |  | AIU |  |  | Total |
Gross deferred revenue, July 1 |  | $ | 28,092 |  |  | $ | 39,725 |  |  | $ | 67,817 |  |  | $ | 25,825 |  |  | $ | 19,976 |  |  | $ | 45,801 |
Revenue earned from prior balances |  |  | (25,035 | ) |  |  | (31,236 | ) |  |  | (56,271 | ) |  |  | (23,375 | ) |  |  | (16,970 | ) |  |  | (40,345 | )
Billings during period(1) |  |  | 99,219 |  |  |  | 57,598 |  |  |  | 156,817 |  |  |  | 96,863 |  |  |  | 47,310 |  |  |  | 144,173 |
Revenue earned for new billings during the period |  |  | (73,411 | ) |  |  | (38,789 | ) |  |  | (112,200 | ) |  |  | (72,054 | ) |  |  | (41,892 | ) |  |  | (113,946 | )
Other adjustments |  |  | (777 | ) |  |  | (330 | ) |  |  | (1,107 | ) |  |  | (146 | ) |  |  | 74 |  |  |  | (72 | )
Gross deferred revenue, September 30 |  | $ | 28,088 |  |  | $ | 26,968 |  |  | $ | 55,056 |  |  | $ | 27,113 |  |  | $ | 8,498 |  |  | $ | 35,611 |
|  | For the Year to Date Ended |  |  | For the Year to Date Ended |
|  | September 30, 2020 |  |  | September 30, 2019 |
|  | CTU |  |  | AIU |  |  | Total |  |  | CTU |  |  | AIU |  |  | Total |
Gross deferred revenue, January 1 |  | $ | 27,845 |  |  | $ | 35,359 |  |  | $ | 63,204 |  |  | $ | 24,250 |  |  | $ | 27,444 |  |  | $ | 51,694 |
Business acquisition, beginning balance |  |  | - |  |  |  | 13,395 |  |  |  | 13,395 |  |  |  | - |  |  | - |  |  |  | - |
Revenue earned from prior balances |  |  | (24,376 | ) |  |  | (38,904 | ) |  |  | (63,280 | ) |  |  | (22,289 | ) |  |  | (21,779 | ) |  |  | (44,068 | )
Billings during period(1) |  |  | 301,727 |  |  |  | 190,589 |  |  |  | 492,316 |  |  |  | 289,803 |  |  |  | 159,711 |  |  |  | 449,514 |
Revenue earned for new billings during the period |  |  | (276,802 | ) |  |  | (174,282 | ) |  |  | (451,084 | ) |  |  | (265,587 | ) |  |  | (157,643 | ) |  |  | (423,230 | )
Other adjustments |  |  | (306 | ) |  |  | 811 |  |  |  | 505 |  |  |  | 936 |  |  |  | 765 |  |  |  | 1,701 |
Gross deferred revenue, September 30 |  | $ | 28,088 |  |  | $ | 26,968 |  |  | $ | 55,056 |  |  | $ | 27,113 |  |  | $ | 8,498 |  |  | $ | 35,611 |
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| 1) | Billings during period includes adjustments for prior billings.
Cash Receipts Our students pay for their costs through a variety of funding sources, including federal loan and grant programs, institutional payment plans, employer reimbursement, Veterans’ Administration and other military funding and grants, private and institutional scholarships and cash payments. Cash receipts from government related sources are typically received during the current academic term. We typically receive funds after the end of an academic term for students who receive employer reimbursements. Students who have not applied for any type of financial aid generally set up a payment plan with the institution and make payments on a monthly basis per the terms of the payment plan. If a student withdraws from one of our institutions prior to the completion of the academic term, we refund the portion of tuition and fees already paid that, pursuant to our refund policy and applicable federal and state law and accrediting agency standards, we are not entitled to retain. Generally, the amount to be refunded to a student is calculated based upon the percent of the term attended and the amount of tuition and fees paid by the student as of their withdrawal date. In certain circumstances, we have recognized revenue for students who have withdrawn that we are not entitled to retain. We have estimated a reserve for these limited circumstances based on historical evidence in the amount $1.2 million and $1.1 million as of September 30, 2020 and December 31, 2019, respectively. Students are typically entitled to a partial refund through approximately halfway of their term. Pursuant to each institution’s policy, once a student reaches the point in the term where no refund is given, the student would not have a refund due if withdrawing from the institution subsequent to that date. Management reassesses collectability when a student withdraws from the institution and has unpaid tuition charges for the current term which the institution is entitled to retain per the applicable refund policy. Such unpaid charges do not meet the threshold of reasonably collectible and are recognized as revenue in accordance with ASC Topic 606 when cash is received and the contract is terminated and neither party has further performance obligations. We have no remaining performance obligations for students who have withdrawn from our institutions, and once the refund calculation is performed and funds are returned to the student, if applicable under our refund policy, no further consideration is due back to the student. We recognized $0.2 million and $0.4 million of revenue for the quarters ended September 30, 2020 and 2019, respectively, and $0.8 million and $0.9 million for the years to date ended September 30, 2020 and 2019, respectively, for payments received from withdrawn students.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 + Details
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