Revenue Recognition, Contracts with Customers

3 Months Ended

Jul. 31, 2019

Revenue Recognition, Contracts with Customers [Abstract]

Revenue Recognition, Contracts with Customers

Note 4 — Revenue Recognition, Contracts with Customers

Disaggregation of Revenue

As previously announced, we have changed our segment reporting structure to align with our strategic focus areas. See Note 10, “Segment Information,” for more details. The following table presents our revenue from contracts with customers disaggregated by segment and product type.

	Three Months Ended July 31, 2019
	Research Publishing & Platforms		Education Publishing & Professional Learning		Education Services		Total
Research Publishing & Platforms:
Research Publishing	$	219,927	$	—	$	—	$	219,927
Research Platforms		9,448		—		—		9,448
Education Publishing & Professional Learning:
Education Publishing		—		65,523		—		65,523
Professional Learning		—		79,335		—		79,335
Education Services:
Education Services		—		—		49,297		49,297
Total	$	229,375	$	144,858	$	49,297	$	423,530

	Three Months Ended July 31, 2018
	Research Publishing & Platforms		Education Publishing & Professional Learning		Education Services		Total
Research Publishing & Platforms:
Research Publishing	$	216,714	$	—	$	—	$	216,714
Research Platforms		8,603		—		—		8,603
Education Publishing & Professional Learning:
Education Publishing		—		74,034		—		74,034
Professional Learning		—		82,390		—		82,390
Education Services:
Education Services		—		—		29,160		29,160
Total	$	225,317	$	156,424	$	29,160	$	410,901

Accounts Receivable, net and Contract Liability Balances

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue when, or as, control of the products or services are transferred to the customer and all revenue recognition criteria have been met.

The following table provides information about receivables and contract liabilities from contracts with customers.

	July 31, 2019		April 30, 2019		Increase/ (Decrease)
Balances from contracts with customers:
Accounts receivable, net	$	281,055	$	294,867	$	(13,812	)
Contract liability ⁽¹⁾		408,630		507,365		(98,735	)
Contract liability (included in Other Long-Term Liabilities)	$	13,752	$	10,722	$	3,030

⁽¹⁾	The sales return reserve recorded in Contract Liability is $33.4 million and $25.9 million, as of July 31, 2019 and April 30, 2019, respectively.

Revenue recognized for the three months ended July 31, 2019 relating to the contract liability at April 30, 2019 was $194.3 million.

Remaining Performance Obligations included in Contract Liability

As of July 31, 2019, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $422.4 million, which included the sales return reserve of $33.4 million. Excluding the sales return reserve, we expect that approximately $375.2 million will be recognized in the next twelve months with the remaining $13.8 million to be recognized thereafter.

Assets Recognized for the Costs to Fulfill a Contract

Costs to fulfill a contract are directly related to a contract that will be used to satisfy a performance obligation in the future and are expected to be recovered. These types of costs are incurred in the following revenue streams, (1) Research Platforms and (2) Education Services.

Our assets associated with incremental costs to fulfill a contract were $9.5 million at July 31, 2019 and are included within Other Non-Current Assets on our Unaudited Condensed Consolidated Statements of Financial Position. We recorded amortization expense of $1.0 million and $0.8 million during the three months ended July 31, 2019 and 2018, respectively, related to these assets within Cost of Sales on the Unaudited Condensed Consolidated Statements of Income.

Sales and value-added taxes are excluded from revenues. Shipping and handling costs, which are primarily incurred within the Education Publishing & Professional Learning segment, occur before the transfer of control of the related goods. Therefore, in accordance with the new revenue standard, it is not considered a promised service to the customer and would be considered a cost to fulfill our promise to transfer the goods. Costs incurred for third party shipping and handling are primarily reflected in Operating and Administrative Expenses on the Unaudited Condensed Consolidated Statements of Income. We incurred $7.4 million and $7.9 million in shipping and handling costs in the three months ended July 31, 2019 and 2018, respectively.