Revenue

Adoption of ASC Topic 606, Revenue from Contracts with Customers

On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605.

We recorded a net increase to opening earnings invested in the business of $3.4 million as of January 1, 2018 due to the cumulative impact of adopting ASC 606. The impact is primarily driven by the deferral of contract costs related to our customer contracts of $5.2 million, partially offset by deferring revenue billed at a point in time for services performed over time of $0.6 million and a deferred tax liability of $1.2 million. As of and for year to date 2018, the consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Our revenues are recorded net of any sales, value added, or similar taxes collected from our customers. We generate revenue from: the hourly sales of services by our temporary employees to customers (“staffing solutions” revenue), the recruiting of permanent employees for our customers (“permanent placement” revenue), and through our talent fulfillment and outcome-based activities (“talent solutions” and “outcome-based services” revenue).

Staffing Solutions Revenue

Staffing solutions can be branch-delivered (Americas and EMEA regions) or centrally delivered (within Global Talent Solutions (“GTS”)). Our Americas Staffing segment is organized to deliver services in a number of specialty staffing solutions, which are summarized as: commercial, specialized professional/technical (“PT”) and educational staffing.

Permanent Placement Revenue

Permanent placement solutions can be branch-delivered (Americas and EMEA regions) or centrally delivered (within GTS). Our permanent placement revenue is recorded when the permanent placement candidate begins full-time employment. On the candidate start date, the customer accepts the candidate and can direct the use of the candidate as well as obtains the significant risk and rewards of the candidate. As such, we consider this the point the control transfers to the customer.

Talent Solutions and Outcome-Based Services Revenue

In addition to centrally delivered staffing services, our GTS segment also includes talent solutions (contingent workforce outsourcing “CWO”, payroll process outsourcing “PPO” and recruitment process outsourcing “RPO”) and outcome-based services (business process outsourcing “BPO”, KellyConnect, career transition/outplacement services and talent advisory services).

The following table presents our segment revenues disaggregated by service type (in millions):



	First Quarter
	2019			2018
Branch-Delivered Staffing
Americas Staffing
Staffing Solutions
Commercial	$	392.5		$	398.4
Educational Staffing	139.6			130.1
Professional/Technical	85.5			67.4
Permanent Placement	8.9			8.4
Total Americas Staffing	626.5			604.3

International Staffing
Staffing Solutions	252.2			276.9
Permanent Placement	6.7			7.8
Total International Staffing	258.9			284.7

Global Talent Solutions
Talent Fulfillment
Staffing Solutions	255.6			284.2
Permanent Placement	0.3			0.4
Talent Solutions	89.7			85.0
Total Talent Fulfillment	345.6			369.6

Outcome-Based Services	155.4			116.2
Total Global Talent Solutions	501.0			485.8

Total Intersegment	(3.8		)	(4.9		)

Total Revenue from Services	$	1,382.6		$	1,369.9

Our operations are subject to different economic and regulatory environments depending on geographic location. Our GTS segment operates in Americas, EMEA and APAC regions. In the first quarter of 2019 and 2018, GTS made up $484.4 million and $468.6 million in total Americas, respectively, $11.1 million and $12.1 million in total EMEA, respectively, and the entire balance in APAC.

The below table presents our revenues disaggregated by geography (in millions):



	First Quarter
	2019		2018
Americas
United States	$	1,018.9	$	974.7
Canada	33.0		33.6
Mexico	27.5		30.4
Puerto Rico	19.2		19.8
Brazil	8.5		9.5
Total Americas	1,107.1		1,068.0

EMEA
France	64.3		71.9
Switzerland	49.5		49.7
Portugal	44.8		51.1
United Kingdom	26.2		29.0
Russia	25.4		26.1
Italy	20.6		20.5
Germany	11.1		16.4
Ireland	10.1		11.3
Other	18.0		20.8
Total EMEA	270.0		296.8

Total APAC	5.5		5.1

Total Kelly Services, Inc.	$	1,382.6	$	1,369.9

Deferred Costs

Deferred sales commissions are paid at initial contract inception and upon contract renewal by our sales team. Deferred sales commissions, which are included in other assets on the consolidated balance sheet, were $2.0 million as of first quarter-end 2019 and $2.3 million as of year-end 2018. Amortization expense for the deferred costs in the first quarter of 2019 was $0.5 million and in the first quarter of 2018 was $0.4 million.

Deferred fulfillment costs are incurred after obtaining a contract in order to generate a resource that will be used to provide our services. Deferred fulfillment costs, which are included in prepaid expenses and other current assets on the consolidated balance sheet, were $2.5 million as of first quarter-end 2019 and $3.0 million as of year-end 2018. Amortization expense for the deferred costs in the first quarter of 2019 was $3.4 million and in the first quarter of 2018 was $2.1 million.