Revenue Recognition, Contracts with Customers

9 Months Ended

Jan. 31, 2020

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 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 January 31,				Nine Months Ended January 31,
	2020		2019		2020		2019
Research Publishing & Platforms:
Research Publishing	$	223,393	$	217,973	$	668,405	$	654,397
Research Platforms		10,163		9,064		29,235		27,032
Total Research Publishing & Platforms		233,556		227,037		697,640		681,429

Academic & Professional Learning:
Education Publishing		100,982		95,562		268,246		277,070
Professional Learning		77,296		80,561		232,615		245,147
Total Academic & Professional Learning		178,278		176,123		500,861		522,217

Education Services:
Education Services		50,776		46,207		153,844		105,244
mthree		4,521		—		4,521		—
Total Education Services		55,297		46,207		158,365		105,244
Total Revenue	$	467,131	$	449,367	$	1,356,866	$	1,308,890

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.

	January 31, 2020		April 30, 2019		Increase/ (Decrease)
Balances from contracts with customers:
Accounts receivable, net	$	301,521	$	306,631	$	(5,110	)
Contract liabilities ⁽¹⁾		413,126		519,129		(106,003	)
Contract liabilities (included in Other Long-Term Liabilities)	$	15,785	$	10,722	$	5,063

⁽¹⁾	The sales return reserve recorded in Contract Liabilities is $40.5 million and $25.9 million, as of January 31, 2020 and April 30, 2019, respectively.

For the nine months ended January 31, 2020, we estimate that we recognized revenue of approximately 85% that was included in the contract liability balance at April 30, 2019.

Remaining Performance Obligations included in Contract Liability

As of January 31, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $428.9 million, which included the sales return reserve of $40.5 million. Excluding the sales return reserve, we expect that approximately $372.6 million will be recognized in the next twelve months with the remaining $15.8 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 $11.2 million at January 31, 2020 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 $3.1 million during the three and nine months ended January 31, 2020, respectively, related to these assets within Cost of Sales on the Unaudited Condensed Consolidated Statements of Income. We recorded amortization expense of $0.7 million and $1.9 million during the three and nine months ended January 31, 2019, 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 Academic & 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 reflected in Operating and Administrative Expenses on the Unaudited Condensed Consolidated Statements of Income. We incurred $7.7 million and $22.7 million in shipping and handling costs in the three and nine months ended January 31, 2020, respectively. We incurred $7.9 million and $24.4 million in shipping and handling costs in the three and nine months ended January 31, 2019, respectively.