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Revenue Recognition, Contracts with Customers | 12 Months Ended
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Apr. 30, 2020
Revenue Recognition, Contracts with Customers [Abstract] |
Revenue Recognition, Contracts with Customers | Note 3 — Revenue Recognition, Contracts with Customers Disaggregation of Revenue The following tables present our revenue from contracts with customers disaggregated by segment and product type.
|  | Years Ended April 30, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Research Publishing & Platforms: |  |  |  |  |  |  |  |  |
Research Publishing |  | $ | 908,952 |  |  | $ | 903,249 |  |  | $ | 903,950 |
Research Platforms |  |  | 39,887 |  |  |  | 35,968 |  |  |  | 32,907 |
Total Research Publishing & Platforms |  |  | 948,839 |  |  |  | 939,217 |  |  |  | 936,857 |
Academic & Professional Learning: |  |  |  |  |  |  |  |  |  |  |  |
Education Publishing |  |  | 352,188 |  |  |  | 372,018 |  |  |  | 401,607 |
Professional Learning |  |  | 298,601 |  |  |  | 331,285 |  |  |  | 338,508 |
Total Academic & Professional Learning |  |  | 650,789 |  |  |  | 703,303 |  |  |  | 740,115 |
Education Services: |  |  |  |  |  |  |  |  |  |  |  |
Education Services |  |  | 214,376 |  |  |  | 157,549 |  |  |  | 119,131 |
mthree |  |  | 17,479 |  |  |  | — |  |  |  | — |
Total Education Services |  |  | 231,855 |  |  |  | 157,549 |  |  |  | 119,131 |
Total Revenue |  | $ | 1,831,483 |  |  | $ | 1,800,069 |  |  | $ | 1,796,103 |
Description of Revenue Generating Activities Refer to Part I, Item 1, “Business” for a description of our business and our reportable segments. Research Publishing & Platforms Segment Research Publishing & Platforms revenue by product type are Research Publishing and Research Platforms. Research Publishing Research Publishing generates the majority of its revenue from contracts with its customers for the following revenue streams:
• | Journal Subscriptions;
• | Licensing, Reprints, Backfiles and Other; and
• | Open Access and Comprehensive Agreements.
Journal Subscriptions Journal subscription contracts are negotiated by us directly with customers or their subscription agents. Subscription periods typically cover calendar years. In a typical journal subscription sale, there is a written agreement between us and our customer that cover multiple years. However, we typically account for these agreements as one-year contracts because our enforceable rights under the agreements are subject to an annual confirmation and negotiation process with the customer. In journal subscriptions, there are generally two performance obligations; a functional intellectual property license with a stand-ready promise to provide access to new content for one year, which includes online hosting of the content; and a functional intellectual property perpetual license for access to historical journal content, which also includes online hosting of the content. The transaction price consists of fixed consideration. Subscription revenue is generally collected in advance. We allocate revenue to the stand-ready promise to provide access to new content for one year based on its observable standalone selling price which is generally the contractually stated price and the revenue for new content is recognized over one year as we have a continuous stand-ready obligation to provide the right of access to additional intellectual property. The allocation of revenue to the perpetual licenses for access to historical journal content is done using the expected cost plus a margin approach as permitted by the revenue standard. Revenue is recognized at the point in time when access to historical content is initially granted. Licensing, Reprints, Backfiles and Other Within licensing, the revenue derived from these contracts is primarily comprised of advance payments, including minimum guarantees and sales- or usage-based royalty agreements. Our intellectual property is considered to be functional intellectual property. Due to the stand-ready promise to provide updates during the subscription period, which is generally an annual period, revenue for the minimum guarantee is recognized on a straight-line basis over the term of the agreement. For our sales-or usage-based royalty agreements, we recognize revenue in the period of usage based on the amounts earned. We record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. We also have certain licenses whereby we receive a non-refundable minimum guarantee against a volume-based royalty throughout the term of the agreement. We recognize volume-based royalty income only when cumulative consideration exceeds the minimum guarantee. Reprints contracts generally contain a single performance obligation which is the delivery of printed articles. Revenue is recognized at the time of delivery of the printed articles. For Backfiles, the performance obligation is the granting of a functional intellectual property license. Revenue is recognized at the time the functional intellectual property license is granted. Other includes our Article Select offering, whereby we have a single performance obligation to our customers to give access to an article through the purchase of a token. The customer redeems the token for access to the article for a 24-hour period. The customer purchases the tokens with an upfront cash payment. Revenue is recognized when access to the article is provided. Open Access and Comprehensive Agreements Under the Author-Funded Access model, we have a signed contract with the customer that contains enforceable rights. The Author-Funded Access model in a typical model includes an over-time single performance obligation that combines a promise to host the customer’s content on our open access platform, and a promise to provide an APC at a discount to eligible users who are defined in the contract, in exchange for an upfront payment. Enforceable right to payment occurs over time as we fulfill our obligation to provide a discount to eligible users, as defined, on future APCs. Therefore, the upfront payment is recorded as a contract liability and revenue is recognized over time. In January 2019, Wiley announced a new contractual arrangement in support of Open Access, a countrywide partnership agreement with Projekt DEAL, a representative of nearly 700 academic institutions in Germany. This transformative three-year agreement provides all Projekt DEAL institutions with access to read Wiley’s academic journals back to the year 1997, and researchers at Projekt DEAL institutions can publish articles open access in Wiley’s journals. The partnership will better support institutions and researchers in advancing open science, driving discovery, and developing and disseminating knowledge. Projekt DEAL includes multiple performance obligations, which include a stand-ready promise to provide access to new content, perpetual license for access to historical journal content and accepting articles to be hosted on our open access platform. We are compensated primarily through a fee per article published and a consolidated access fee. The consideration for Projekt DEAL consists of fixed and variable consideration. We allocated the total consideration to the fixed and variable components based on stand-alone selling prices for each performance obligation. Research Platforms Atypon contracts typically include a single performance obligation for the implementation and hosting subscription services. The transaction price is fixed which may include price escalators that are fixed increases per year, and therefore, revenue is recognized upon the initiation of the subscription period and straight-lined over the contract period. The duration of these contracts is generally multi-year ranging from 2-5 years. Academic & Professional Learning Academic & Professional Learning revenue by product type are Education Publishing and Professional Learning. Education Publishing Education Publishing generates the majority of its revenue from contracts with its customers for the following revenue streams:
• | Education and STM Publishing;
• | Digital Courseware;
• | Test Preparation and Certification; and
• | Licensing and Other
Education Publishing and STM (Scientific, Technical and Medical) Publishing within Education Publishing and Professional Publishing within Professional Learning product type below Our performance obligations as it relates to Education, STM and Professional Publishing are primarily book products delivered in both print and digital form which could include a single or multiple performance obligations based on the number of print or digital books purchased which are represented by an International Standard Book Number (“ISBN’s”), with each ISBN representing a performance obligation. Each ISBN has an observable stand-alone selling price since Wiley sells the books separately. This revenue stream also includes variable consideration as it relates to discounts and returns for both print and digital books. Discounts are identifiable by performance obligation and therefore are applied at the point of sale by performance obligation. The process that we use to determine our sales returns and the related reserve provision charged against revenue is based on applying an estimated return rate to current year returnable print book sales. This rate is based upon an analysis of actual historical return experience in the various markets and geographic regions in which we do business. We collect, maintain and analyze significant amounts of sales returns data for large volumes of homogeneous transactions. This allows us to make reasonable estimates of the amount of future returns. All available data is utilized to identify the returns by market and to which fiscal year the sales returns apply. This enables management to track the returns in detail and identify and react to trends occurring in the marketplace, with the objective of being able to make the most informed judgments possible in setting reserve rates. Associated with the estimated sales return reserves, we also include a related reduction in inventory and royalty costs as a result of the expected returns. As it relates to print and digital books within the Education, STM, and Professional Publishing, revenue is recognized at the point when control of product transfers, which for print is upon shipment or for digital when fulfillment of the products has been rendered. Digital Courseware Courseware customers purchase access codes to utilize the product. This could include a single or multiple performance obligations based on the number of course ISBN’s purchased. Revenue is recognized when the access codes are activated and then over the applicable semester term such product relates to. Test Preparation and Certification Test Preparation and Certification contracts are generally three-year agreements. This revenue stream includes multiple performance obligations as it relates to the on-line and printed course materials, including such items as textbooks, e-books, video lectures, flashcards, study guides and test banks. The transaction price is fixed; however, discounts are offered and returns of certain products are allowed. We allocate revenue to each performance obligation based on its standalone selling price. Depending on the performance obligation, revenue is recognized at the time the product is delivered and control has passed to the customer or over time due to our stand-ready obligation to provide updates to the customer. Licensing and Other Revenue derived from our licensing contracts is primarily comprised of advance payments and sales- or usage-based royalties. Revenue for advance payments is recognized at the point in time that the functional intellectual property license is granted. For sales- or usage- based royalties, we record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Professional Learning Professional Learning generates the majority of its revenue from contracts with its customers for the following revenue streams:
• | Professional Publishing, which is described above;
• | Licensing and Other, which is described above;
• | Corporate Training - Professional Assessment; and
• | Corporate Training - Corporate Learning
Corporate Training - Professional Assessment Professional Assessment through our authorized distributor network includes multiple performance obligations. This includes a performance obligation that includes an annual membership which includes the right to purchase products and services, access to the platform, support and training. This performance obligation is recognized over time since we have an obligation to stand-ready for the customer’s use of the services. In addition, there are performance obligations for the assessments and related products or services which are recognized at a point in time when the assessment, product or service is provided or delivered. The transaction price is allocated to each performance obligation based on its observable standalone selling price. In addition, as it relates to Professional Assessment customers’ unexercised rights for situations where we have received a nonrefundable payment for a customer to receive an assessment and the customer is not expected to exercise such right, we will recognize such “breakage” amounts as revenue in proportion to the pattern of rights exercised by the customer which is generally one year. Corporate Training - Corporate Learning The transaction price consists of fixed consideration that is determined at the beginning of each year and received at the same time. Within Corporate Learning there are multiple performance obligations which includes the licenses to learning content and the learning application. Revenue is recognized over time as we have a continuous obligation to provide the right of access to the intellectual property which includes the licenses and learning applications. Education Services Education Services revenue by product type are Education Services and mthree. Education Services Revenue is primarily derived from pre-negotiated contracts with institutions that provide for a share of tuition generated from students who enroll in a program. The duration of Education Services contracts are generally multi-year agreements ranging from a period of 7-10 years, with some having optional renewal periods. These optional renewal periods are not a material right and are not considered a separate performance obligation. Education Services includes a single performance obligation for the services provided because of the integrated technology and services our institutional clients need to attract, enroll, educate and support students. Consideration is variable since it is based on the number of students enrolled in a program. We begin to recognize revenue at the start of the delivery of the class within a semester, which is also when the variable consideration contingency is resolved. mthree mthree includes a performance obligation for the services provided which is recognized over the period of time the services are provided to its customers. 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.
|  | April 30, 2020 |  |  | April 30, 2019 |  |  | Increase/ (Decrease) |
Balances from contracts with customers: |  |  |  |  |  |  |  |  |
Accounts receivable, net |  | $ | 309,384 |  |  | $ | 306,631 |  |  | $ | 2,753 |
Contract liabilities (1) |  |  | 520,214 |  |  |  | 519,129 |  |  |  | 1,085 |
Contract liabilities (included in Other Long-Term Liabilities) |  | $ | 14,949 |  |  | $ | 10,722 |  |  | $ | 4,227 |
(1) | The sales return reserve recorded in Contract Liabilities is $32.8 million and $25.9 million as of April 30, 2020 and April 30, 2019, respectively.
For the year ended April 30, 2020, we estimate that we recognized as revenue substantially all of the current contract liability at April 30, 2019. The increase to contract liabilities in fiscal year 2020 was primarily driven by renewals of journal subscription agreements, as well as open access and comprehensive agreements, partially offset by revenue earned on journal subscriptions and open access and comprehensive agreements and the negative impact of foreign exchange. The acquisitions during the year ended April 30, 2020 did not have a material impact on the change in our contract liability balances during fiscal year 2020. Remaining Performance Obligations included in Contract Liability As of April 30, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $535.2 million, which included the sales return reserve of $32.8 million. Excluding the sales return reserve, we expect that approximately $487.5 million will be recognized in the next twelve months with the remaining $14.9 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 costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. 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 $11.5 million and $8.9 million at April 30, 2020 and 2019, respectively, and are included within Other Non-Current Assets on our Consolidated Statements of Financial Position. We recorded amortization expense of $4.2 million and $2.6 million during the years ended April 30, 2020 and 2019, respectively, related to these assets within Cost of Sales on the Consolidated Statements of (Loss) Income. Sales and value-added taxes are excluded from revenues. Shipping and handling costs, which are primarily incurred within the Academic & Professional Learning segment, occur before the transfer of control of the related goods. Therefore, in accordance with the 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 Consolidated Statements of (Loss) Income. We incurred $28.8 million, $32.7 million, and $33.7 million in shipping and handling costs in the years ended April 30, 2020, 2019 and 2018 respectively.

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