XML 33 R22.htm IDEA: XBRL DOCUMENT
v3.24.3

Note 13 - Revenue From Contracts With Customers | 9 Months Ended
--- | ---
Sep. 30, 2024
Notes to Financial Statements |
Revenue from Contract with Customer [Text Block] | NOTE 13 REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue from contracts with customers relates to the Extended Warranty and Kingsway Search Xcelerator segments and includes: vehicle service agreement fees, guaranteed asset protection products ("GAP") commissions, maintenance support service fees, warranty product commissions, business services consulting revenue, healthcare services revenue and software license and support revenue. Revenue is based on terms of various agreements with credit unions, consumers and businesses. Customers either pay in full at the inception of a warranty contract or commission product sale, or when consulting, healthcare and software license and support services are billed, or on terms subject to the Company’s customary credit reviews. The following table disaggregates revenues from contracts with customers by revenue type for the three and nine months ended September 30, 2024 and September 30, 2023:
(in thousands) |  |  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Vehicle service agreement fees and GAP commissions | IWS, Geminus and PWI |  | $ | 15,215 |  |  | $ | 14,897 |  |  | $ | 45,195 |  |  | $ | 44,766 |
Maintenance support service fees | Trinity |  |  | 1,300 |  |  |  | 1,320 |  |  |  | 2,941 |  |  |  | 3,204 |
Warranty product commissions | Trinity |  |  | 1,328 |  |  |  | 1,037 |  |  |  | 3,496 |  |  |  | 2,998 |
Business services consulting fees | Ravix and CSuite |  |  | 4,026 |  |  |  | 4,508 |  |  |  | 12,958 |  |  |  | 15,138 |
Healthcare services fees | SNS and DDI |  |  | 4,240 |  |  |  | 2,856 |  |  |  | 12,554 |  |  |  | 11,098 |
Software license and support fees | SPI |  |  | 1,027 |  |  |  | 172 |  |  |  | 2,598 |  |  |  | 172 |
Service fee and commission revenue |  | $ | 27,136 |  |  | $ | 24,790 |  |  | $ | 79,742 |  |  | $ | 77,376 |
Vehicle service agreement fees include the fees collected to cover the costs of future automobile mechanical breakdown claims and the associated administration of those claims. Vehicle service agreement fees are earned over the duration of the vehicle service agreement contracts as the single performance obligation is satisfied. Vehicle service agreement fees are initially recorded as deferred service fees with revenues recognized over the term of the contract based on the proportion of expected claims to total overall claims to be incurred over the life of the contract. The Company believes this reasonably represents the transfer of services to the vehicle service contract holder over the warranty term. The Company compares the remaining deferred service fees balance to the estimated amount of expected future claims under the vehicle service agreement contracts and records an additional accrual if the deferred service fees balance is less than expected future claims costs. In certain jurisdictions the Company is required to refund to a customer a pro-rata share of the vehicle service agreement fees if a customer cancels the agreement prior to the end of the term. Depending on the jurisdiction, the Company may be entitled to deduct from the refund a cancellation fee and/or amounts for claims incurred prior to cancellation. While refunds vary depending on the term and type of product offered, historically refunds have averaged 5.8% to 11.7% of the original amount of the vehicle service agreement fee. Revenues recorded by the Company are net of variable consideration related to refunds and the associated refund liability is included in accrued expenses and other liabilities. The Company estimates refunds based on the actual historical refund rates by warranty type taking into consideration current observable refund trends in estimating the expected amount of future customer refunds to be paid at each reporting period. Maintenance support service fees include the service fees collected to administer equipment breakdown and maintenance support services and are earned as services are rendered. Warranty product commissions include the commissions from the sale of warranty contracts for certain new and used heating, ventilation, air conditioning ("HVAC"), standby generator, commercial LED lighting and commercial refrigeration equipment. The Company acts as an agent on behalf of the third-party insurance companies that underwrite and guaranty these warranty contracts. The Company does not guaranty the performance underlying the warranty contracts it sells. Warranty product commissions are earned at the time of the warranty product sales. Business services consulting fees include the revenue from providing outsourced finance and human resources consulting services. The Company invoices for business services revenue based on contracted rates. Revenue is earned as services are provided. Healthcare services fees include revenue from providing healthcare professional staffing services and outsourced cardiac telemetry services for long-term acute care and inpatient rehabilitation hospitals. The Company invoices for healthcare services revenue based on contracted rates. Revenue is earned as services are provided. Software license and support fees include revenue from the sale or rental of software products created exclusively to serve the management needs of all types of shared-ownership properties. Software licenses are on-premise at customer locations and considered fully functional when made available and delivered to the customer. As the customer can use and benefit from the license on its own, software licenses represent distinct performance obligations. Revenue is recognized upfront at the point in time when control is transferred, which is defined as the point in time when the customer can use and benefit from the license. The Company's software licenses are sold as term licenses, and the contracts include software support services, which are accounted for as separate performance obligations. Software support revenue is recognized ratably over the contract period as services are rendered. For certain SPI contracts, the transaction price of the software license is billed in installments, typically over a three to five year period. The Company allocates a portion of the consideration received from these arrangements to a financing component when it determines that a significant financing component exists. The financing component is subsequently recognized as interest income separate from software license and support fee revenue over the term of the arrangement with the customer. Pursuant to practical expedients afforded under ASC 606, the Company does not recognize a financing component for software license sales that have a term of one year or less. The Company's revenue recognition policies are further described in Note 2(p), "Summary of Significant Accounting Policies - Revenue recognition," to the consolidated financial statements in the 2023 Annual Report. Service fee receivables Receivables from contracts with customers are reported as service fee receivable, net in the consolidated balance sheets and at September 30, 2024 and December 31, 2023 were $10.0 million and $10.1 million, respectively. The decrease in receivables from contracts with customers is primarily due to the timing difference between the Company's satisfaction of performance obligations and customer payments, partially offset by an increase related to Image Solutions receivables which were acquired om September 26, 2024. Service fee receivable is reported net of an estimated allowance for credit losses. During each of the three months ended September 30, 2024 and September 30, 2023, the Company recorded an increase to its allowance for credit losses of $0.1 million ($0.2 million for each of the nine months ended September 30, 2024 and September 30, 2023, respectively). Service fee receivables that are deemed to be uncollectible are written off against the allowance for credit losses when identified. The Company recorded write-offs of service fee receivables that were deemed to be uncollectible of zero and less than $0.1 million during the three months ended September 30, 2024 and September 30, 2023, respectively ($0.1 million and less than $0.1 million for the nine months ended September 30, 2024 and September 30, 2023, respectively). Contract asset The Company records a contract asset when revenue is recognized prior to billing the customer. Upon billing, which typically occurs over a three to five year installment period, the value of the contract asset is reversed and service fee receivable is recorded. The Company had no contract asset prior to the acquisition of SPI on September 7, 2023. The contract asset is included in other assets in the consolidated balance sheets, and at September 30, 2024 and December 31, 2023 was $1.7 million. During the nine months ended September 30, 2024, the Company recorded additions to the contract asset of $0.8 million, reduced the contract asset by $0.4 million as a result of billings to customers and recorded a measurement period adjustment to decrease the contract asset related by $0.3 million (the latter as discussed in Note 5, "Acquisitions and Discontinued Operations"). The contract asset is reported net of an estimated allowance for credit losses. During the three and nine months ended September 30, 2024, the Company recorded an increase to its allowance for credit losses of $0.2 million. Contract assets that are deemed to be uncollectible are written off against the allowance for credit losses when identified. The Company recorded write-offs to the contract asset for amounts that were deemed to be uncollectible of zero and less than $0.1 million during the three and nine months ended September 30, 2024. Deferred service fees The Company records deferred service fees resulting from contracts with customers when payment is received in advance of satisfying the performance obligations. Changes in deferred service fees for the nine months ended September 30, 2024 were as follows:
(in thousands) |  | Nine Months Ended September 30, 2024 |
Balance, December 31, 2023 |  | $ | 83,995 |
Deferral of revenue |  |  | 47,813 |
Recognition of deferred service fees |  |  | (47,150 | )
Balance, September 30, 2024 |  | $ | 84,658 |
The increase in deferred service fees between December 31, 2023 and September 30, 2024 is primarily due to additions to deferred service fees in excess of deferred service fees recognized during the nine months ended September 30, 2024. Approximately $35.3 million and $32.9 million of service fee and commission revenue recognized during the nine months ended September 30, 2024 and September 30, 2023 was included in deferred service fees as of December 31, 2023 and December 31, 2022, respectively. Remaining performance obligations The Company expects to recognize within one year as service fee and commission revenue approximately 47.0% of the outstanding performance obligations as of September 30, 2024. The balance relates primarily to vehicle service agreement fees. Deferred contract costs Deferred contract costs represent the deferral of incremental costs to obtain or fulfill a contract with a customer. Incremental costs to obtain a contract with a customer primarily include sales commissions. The Company capitalizes costs incurred to fulfill a contract if the costs are identifiable, generate or enhance resources used to satisfy future performance obligations and are expected to be recovered. Costs to fulfill a contract include labor costs for set-up activities directly related to the acquisition of vehicle service agreements. Contract costs are deferred and amortized over the expected customer relationship period consistent with the pattern in which the related revenues are earned. Amortization of incremental costs to obtain a contract and costs to fulfill a contract with a customer are recorded in commissions in the unaudited consolidated statements of operations. No impairment charges related to deferred contract costs were recorded during the three and nine months ended September 30, 2024 and September 30, 2023. The deferred contract costs balances and related amortization expense for the three months ended September 30, 2024 and September 30, 2023 are comprised as follows:
(in thousands) |  | Three months ended September 30, 2024 |  |  | Three months ended September 30, 2023 |
|  | Costs to Obtain a Contract |  |  | Costs to Fulfill a Contract |  |  | Total |  |  | Costs to Obtain a Contract |  |  | Costs to Fulfill a Contract |  |  | Total |
Balance at June 30, net |  | $ | 13,912 |  |  | $ | 81 |  |  | $ | 13,993 |  |  | $ | 13,709 |  |  | $ | 83 |  |  | $ | 13,792 |
Additions |  |  | 2,384 |  |  |  | 6 |  |  |  | 2,390 |  |  |  | 2,473 |  |  |  | 6 |  |  |  | 2,479 |
Amortization |  |  | (2,285 | ) |  |  | (4 | ) |  |  | (2,289 | ) |  |  | (2,373 | ) |  |  | (6 | ) |  |  | (2,379 | )
Balance at September 30, net |  | $ | 14,011 |  |  | $ | 83 |  |  | $ | 14,094 |  |  | $ | 13,809 |  |  | $ | 83 |  |  | $ | 13,892 |
The deferred contract costs balances and related amortization expense for the nine months ended September 30, 2024 and September 30, 2023 are comprised as follows:
(in thousands) |  | Nine months ended September 30, 2024 |  |  | Nine months ended September 30, 2023 |
|  | Costs to Obtain a Contract |  |  | Costs to Fulfill a Contract |  |  | Total |  |  | Costs to Obtain a Contract |  |  | Costs to Fulfill a Contract |  |  | Total |
Balance at December 31, net |  | $ | 13,653 |  |  | $ | 81 |  |  | $ | 13,734 |  |  | $ | 13,174 |  |  | $ | 83 |  |  | $ | 13,257 |
Additions |  |  | 7,267 |  |  |  | 19 |  |  |  | 7,286 |  |  |  | 7,293 |  |  |  | 19 |  |  |  | 7,312 |
Amortization |  |  | (6,909 | ) |  |  | (17 | ) |  |  | (6,926 | ) |  |  | (6,658 | ) |  |  | (19 | ) |  |  | (6,677 | )
Balance at September 30, net |  | $ | 14,011 |  |  | $ | 83 |  |  | $ | 14,094 |  |  | $ | 13,809 |  |  | $ | 83 |  |  | $ | 13,892 |

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration