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Note C - Revenue from Contracts with Customers | 6 Months Ended
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Jun. 30, 2020
Notes to Financial Statements |
Revenue from Contract with Customer [Text Block] | Note C - Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014 - 09, Revenue from Contracts with Customers . Under ASC 606, Revenue from Contracts with Customers, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of the new standard, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The new standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard also includes criteria for the capitalization and amortization of certain contract acquisition and fulfillment costs. Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Our contracts with customers state the terms of sale, including the description, quantity, and price of the product or service purchased. Payment terms can vary by contract, but the period between invoicing and when payment is due is not significant. At June 30, 2020 and December 31, 2019 , our contracts do not include any significant financing components. Consistent with legacy GAAP, we present sales taxes assessed on revenue-producing transactions on a net basis. Disaggregation of Revenue We disaggregate revenue by vertical market and key revenue stream. The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2020 and 2019 by our key vertical markets:
In thousands |  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, 2020 |  |  | June 30, 2019 |  |  | June 30, 2020 |  |  | June 30, 2019 |
B2B |  | $ | 14,200 |  |  | $ | 11,074 |  |  | $ | 25,412 |  |  | $ | 23,859 |
Consumer Brands |  |  | 12,586 |  |  |  | 11,888 |  |  |  | 23,640 |  |  |  | 24,051 |
Financial Services |  |  | 6,877 |  |  |  | 12,250 |  |  |  | 14,982 |  |  |  | 25,215 |
Healthcare |  |  | 3,964 |  |  |  | 5,061 |  |  |  | 8,172 |  |  |  | 9,689 |
Retail |  |  | 3,361 |  |  |  | 10,639 |  |  |  | 8,622 |  |  |  | 22,949 |
Transportation |  |  | 613 |  |  |  | 3,774 |  |  |  | 1,295 |  |  |  | 8,073 |
Total Revenues |  | $ | 41,601 |  |  | $ | 54,686 |  |  | $ | 82,123 |  |  | $ | 113,836 |
The nature of the services offered by each key revenue stream is different. The following tables summarize revenue from contracts with customers for the three and six months ended June 30, 2020 and 2019 by our four major revenue streams and the pattern of revenue recognition:
|  | Three Months Ended June 30, 2020 |
In thousands |  | Revenue for performance obligations recognized over time |  |  | Revenue for performance obligations recognized at a point in time |  |  | Total |
Agency & Digital Services |  | $ | 4,543 |  |  | $ | 97 |  |  | $ | 4,640 |
Contact Centers |  |  | 18,437 |  |  |  | — |  |  |  | 18,437 |
Database Marketing Solutions |  |  | 4,403 |  |  |  | 721 |  |  |  | 5,124 |
Direct Mail, Logistics, and Fulfillment |  |  | 10,942 |  |  |  | 2,458 |  |  |  | 13,400 |
Total Revenues |  | $ | 38,325 |  |  | $ | 3,276 |  |  | $ | 41,601 |
|  | Three Months Ended June 30, 2019 |
In thousands |  | Revenue for performance obligations recognized over time |  |  | Revenue for performance obligations recognized at a point in time |  |  | Total |
Agency & Digital Services |  | $ | 6,314 |  |  | $ | 92 |  |  | $ | 6,406 |
Contact Centers |  |  | 16,332 |  |  |  | — |  |  |  | 16,332 |
Database Marketing Solutions |  |  | 5,367 |  |  |  | 580 |  |  |  | 5,947 |
Direct Mail, Logistics, and Fulfillment |  |  | 22,340 |  |  |  | 3,661 |  |  |  | 26,001 |
Total Revenues |  | $ | 50,353 |  |  | $ | 4,333 |  |  | $ | 54,686 |
|  | Six Months Ended June 30, 2020 |
In thousands |  | Revenue for performance obligations recognized over time |  |  | Revenue for performance obligations recognized at a point in time |  |  | Total |
Agency & Digital Services |  | $ | 9,473 |  |  | $ | 236 |  |  | $ | 9,709 |
Contact Centers |  |  | 30,242 |  |  |  | — |  |  |  | 30,242 |
Database Marketing Solutions |  |  | 9,005 |  |  |  | 1,303 |  |  |  | 10,308 |
Direct Mail, Logistics, and Fulfillment |  |  | 26,367 |  |  |  | 5,497 |  |  |  | 31,864 |
Total Revenues |  | $ | 75,087 |  |  | $ | 7,036 |  |  | $ | 82,123 |
|  | Six Months Ended June 30, 2019 |
In thousands |  | Revenue for performance obligations recognized over time |  |  | Revenue for performance obligations recognized at a point in time |  |  | Total |
Agency & Digital Services |  | $ | 12,507 |  |  | $ | 131 |  |  | $ | 12,638 |
Contact Centers |  |  | 32,070 |  |  |  | — |  |  |  | 32,070 |
Database Marketing Solutions |  |  | 11,473 |  |  |  | 1,366 |  |  |  | 12,839 |
Direct Mail, Logistics, and Fulfillment |  |  | 47,078 |  |  |  | 9,211 |  |  |  | 56,289 |
Total Revenues |  | $ | 103,128 |  |  | $ | 10,708 |  |  | $ | 113,836 |
Our contracts with customers may consist of multiple performance obligations. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. For most performance obligations, we determine SSP based on the price at which the performance obligation is sold separately. Although uncommon, if the SSP is not observable through past transactions, we estimate the SSP taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Further discussion of other performance obligations in each of our major revenue streams follows: Agency & Digital Services Our agency services include full-service, customer engagement agencies specializing in direct and digital communications for both consumer and business-to-business markets. Our digital solutions integrate online services within the marketing mix and include: search engine management, display, digital analytics, website development and design, digital strategy, social media, email, e-commerce, and interactive relationship management. Our contracts may include a promise to purchase media or acquire search engine marketing solutions on behalf of our clients; in such cases, we have determined we are an agent, rather than principal and therefore recognize the net consideration as revenue. Most agency and digital services performance obligations are satisfied over time and often offered on a project basis. We have concluded that the best approach of measuring the progress toward completion of the project-based performance obligations is the input method based on costs or labor hours incurred to date dependent upon whether costs or labor hours more accurately depict the transfer of value to the customer. The variable consideration in these contracts primarily relates to time and material-based services and reimbursable out-of-pocket travel costs, both of which are estimated using the expected value method. For time and material-based contracts, we use the “as invoiced” practical expedient. Contact Centers We operate tele-service workstations in the United States, Asia, and Europe to provide advanced contact center solutions such as: speech, voice and video chat, integrated voice response, analytics, social cloud monitoring, and web self-service. Performance obligations are stand-ready obligations and satisfied over time. With regard to account management and software as a service (“SaaS”), we use a time-elapsed output method. For performance obligations where we charge customers a transaction-based fee, we use the output method based on transaction quantities. In most cases, our contracts provide us the right to invoice for services provided, therefore, we generally use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their standalone selling prices. The variable consideration in our contracts results primarily from the transaction-based fee structure of some performance obligations with their total transaction quantities to be provided unknown at the onset of a contract, which is estimated using the expected value method. Database Marketing Solutions Our solutions are built around centralized marketing databases with services rendered to build custom databases, database hosting services, customer or target marketing lists and data processing services. These performance obligations, including services rendered to build a custom database, database hosting services, professional services, customer or target marketing lists and data processing services, may be satisfied over time or at a point in time. We provide SaaS solutions to host data for customers and have concluded that they are stand-ready obligations to be recognized over time on a monthly basis. Our promise to provide certain data related services meets the over-time recognition criteria because our services do not create an asset with an alternative use, and we have an enforceable right to payment. For performance obligations recognized over time, we choose either the input ( i.e . labor hour) or output method ( i.e. number of customer records) to measure the progress toward completion depending on the nature of the services provided. Some of our other data-related services do not meet the over-time criteria and are therefore, recognized at a point-in-time, typically upon the delivery of a specific deliverable. We charge our customers for certain data-related services at a fixed transaction-based rate, e.g., per thousand customer records processed. Because the quantity of transactions is unknown at the onset of a contract, our transaction price is variable, and we use the expected value method to estimate the transaction price. The uncertainty associated with the variable consideration generally resolves within a short period of time since the duration of these contracts is generally less than two months. Direct Mail, Logistics, and Fulfillment Our services, delivered internally and with our partners, include: digital printing, print on demand, advanced mail optimization, logistics and transportation optimization, tracking, commingling, shrink wrapping, and specialized mailings. We also maintain fulfillment centers where we provide custom kitting services, print on demand, product recalls, and freight optimization, thereby allowing our customers to distribute literature and other marketing materials. The majority of performance obligations offered within this revenue stream are satisfied over time and utilize the input or output method, depending on the nature of the service, to measure progress toward satisfying the performance obligation. For performance obligations where we charge customers a transaction-based fee, we utilize the output method based on the quantities fulfilled. Services provided through our fulfillment centers are typically priced at a per transaction basis and our contracts provide us the right to invoice for services provided and reflects the value to the customer of the services transferred to date. In most cases, we use the “as invoiced” practical expedient to recognize revenue associated with these performance obligations unless significant discounts are offered in a contract and prices for services do not represent their standalone selling prices. For our direct mail revenue stream, our contracts may include a promise to purchase postage on behalf of our clients; in such cases, we have determined we are an agent, rather than principal and therefore recognize net consideration as revenue. The variable consideration in our contracts results primarily from the transaction-based fee structure of some performance obligations with their total transaction quantities to be provided unknown at the onset of a contract, which is estimated using the expected value method. Upfront Non-Refundable Fees We may receive non-refundable upfront fees from customers for implementation of our SaaS database solutions products or for providing training in connection with our contact center solutions. These activities are not deemed to transfer a separate promised service and therefore, represent advanced payments. As we do not deem these activities as transferring a separate promised service, the receipt of such fees represents advanced payments. Where customers have an option to renew a contract, the customer is not required to pay similar upfront fees upon renewal. As a result, we have determined that these renewal options provide for the purchase of future services at a reduced rate and therefore, provide a material right. These upfront non-refundable fees are recognized over the period of benefit which is generally consistent with estimated customer life ( four to five years for database solutions contracts and six months to one year for contact center contracts). The balance of upfront non-refundable fees collected from customers was immaterial as of June 30, 2020 and 2019 . Transaction Price Allocated to Future Performance Obligations We have elected to apply certain optional exemptions that limit the disclosure requirements over remaining performance obligations at period end to exclude: performance obligations that have an original expected duration of one year or less, transactions using the “as invoiced” practical expedient, or when a performance obligation is a series and we have allocated the variable consideration directly to the services performed. As of June 30, 2020, we had no transaction prices allocated to unsatisfied or partially satisfied performance obligations. Contract Balances We record a receivable when revenue is recognized prior to invoicing when we have an unconditional right to consideration (only the passage of time is required before payment of that consideration is due) and a contract asset when the right to payment is conditional upon our future performance such as delivery of an additional good or service ( e.g . customer contract requires customer's final acceptance of custom database solution or delivery of final marketing strategy delivery presentation before customer payment is required). If invoicing occurs prior to revenue recognition, the unearned revenue is presented on our Condensed Consolidated Balance Sheet as a contract liability, referred to as deferred revenue. The following table summarizes our contract balances as of June 30, 2020 and December 31, 2019 :
In thousands |  | June 30, 2020 |  |  | December 31, 2019 |
Contract assets |  | $ | 652 |  |  | $ | 805 |
Deferred revenue and customer advances |  |  | 5,887 |  |  |  | 4,397 |
Deferred revenue, included in other long-term liabilities |  |  | 776 |  |  |  | 886 |
Revenue recognized during the six months ended June 30, 2020 from amounts included in deferred revenue at December 31, 2019 was approximately $3.8 million. Costs to Obtain and Fulfill a Contract We recognize an asset for the direct costs incurred to obtain and fulfill contracts with customers to the extent that we expect to recover these costs and if the benefit is longer than one year. These costs are amortized to expense over the expected period of the benefit in a manner that is consistent with the transfer of the related goods or services to which the asset relates. We capitalized a portion of commission expense, implementation and other costs that represents the cost to obtain a contract. The remaining unamortized contract costs were $1.6 million as of June 30, 2020 . For the periods presented, no impairment was recognized.

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- 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 -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 + Details
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