Revenue

Disaggregated Revenue Data

The Company provides a broad range of services to a large base of clients across the full spectrum of industry verticals on a global basis. The primary source of revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses. Certain clients may engage with the Company in various geographic locations, across multiple disciplines, and through multiple Partner Firms. Representation of a client rarely means that MDC handles marketing communications for all brands or product lines of the client in every geographical location. The Company’s Partner firms often cooperate with one another through referrals and the sharing of both services and expertise, which enables MDC to service clients’ varied marketing needs by crafting custom integrated solutions. Additionally, the Company maintains separate, independent operating companies to enable it to effectively manage potential conflicts of interest by representing competing clients across the MDC network.

The following table presents revenue disaggregated by industry vertical for the three months ended March 31, 2018, and the impact of adoption of ASC 606:



		For the three months ended March 31,
		2018
Industry	Reportable Segment	As reported		Adjustment to exclude impact of Adoption of ASC 606		Adjusted		2017
Food & Beverage	All	$	64,285	$	6,805	$	71,090	$	62,273
Retail	All	35,772		840		36,612		43,324
Consumer Products	All	31,802		132		31,934		37,922
Communications	All, excluding Domestic Creative Agencies	29,657		3,311		32,968		35,728
Automotive	All, excluding Domestic Creative Agencies	20,494		4,218		24,712		32,354
Technology	All	34,144		2,835		36,979		30,550
Healthcare	All	33,170		968		34,138		28,069
Financials	All	21,838		285		22,123		19,983
Transportation and Travel/Lodging	All	14,848		697		15,545		13,213
Other	All	40,958		1,185		42,143		41,284
		$	326,968	$	21,276	$	348,244	344,700

MDC has historically largely focused where the Company was founded in North America, the largest market for its services in the world. In recent years the Company has expanded its global footprint to support clients looking for help to grow their businesses in new markets. Today, MDC’s Partner Firms are located in the United States, Canada, and an additional thirteen countries around the world. In the past, some clients have responded to weakening economic conditions with reductions to their marketing budgets, which included discretionary components that are easier to reduce in the short term than other operating expenses.

The following table presents revenue disaggregated by geography:



		For the three months ended March 31,
		2018
Geographic Location	Reportable Segment	As reported		Adjustment to exclude impact of Adoption of ASC 606		Adjusted		2017
United States	All	$	256,524	$	9,018	$	265,542	$	274,682
Canada	All, excluding Media Services	26,379		953		27,332		26,470
Other	All	44,065		11,305		55,370		43,548
		$	326,968	$	21,276	$	348,244	$	344,700

For more detailed information about the Company’s reportable segments, see Note 12.

Contract assets and liabilities

Contract assets consist of fees and reimbursable outside vendor costs incurred on behalf of clients when providing advertising, marketing and corporate communications services that have not yet been invoiced to clients. Unbilled service fees were $75,363 and $54,177 at March 31, 2018 and December 31, 2017, respectively, and are included as a component of accounts receivable on the unaudited condensed consolidated balance sheets. Outside vendor costs incurred on behalf of clients which have yet to be invoiced were $57,885 and $31,146 at March 31, 2018 and December 31, 2017, respectively, and are included on the unaudited condensed consolidated balance sheets as expenditures billable to clients. Such amounts are invoiced to clients at various times over the course of the production process.

Contract liabilities consist of fees billed to clients in excess of fees recognized as revenue and are classified as advance billings on the Company’s unaudited condensed consolidated balance sheets. Advance billings at March 31, 2018 and December 31, 2017 were $210,245 and $148,133, respectively. The increase in the advance billings balance of $62,112 for the three months ended March 31, 2018 is primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $72,160 of revenues recognized that were included in the advance billings balances as of December 31, 2017.

Changes in the contract asset and liability balances during the three months ended March 31, 2018 and December 31, 2017 were not materially impacted by write-offs, impairment losses or any other factors.

Practical expedients

In adopting ASC 606, the Company applied the practical expedient to not disclose information about remaining performance obligations that have original expected durations of one year or less. Amounts related to those performance obligations with expected durations of greater than one year are immaterial.