Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Tables in thousands, except per share data)
(1) Basis of Presentation
We prepared the accompanying condensed consolidated financial statements following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States, or GAAP, for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted for interim periods. Balance sheet amounts are as of June 30, 2020, and December 31, 2019, and operating result amounts are for the three and six months ended June 30, 2020, and 2019, respectively, and include all normal and recurring adjustments that we considered necessary for the fair summarized presentation of our financial position and operating results. As these are condensed financial statements, one should also read the financial statements and notes included in our latest Form 10-K for the year ended December 31, 2019. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. Certain amounts for the previous year have been reclassified to conform to the current year presentation.
Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions, and other events and circumstances from non-owner sources and includes all components of net income (loss) and other comprehensive income (loss). We had no items of other comprehensive income (loss) for the three and six months ended June 30, 2020, and 2019.
(2) Accounting Standards and Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Except for the accounting policies for ASU 2016-13, Financial Instruments - Credit Losses, (“ASU 2016-13”), there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 19, 2020, that have had a material impact on our condensed consolidated financial statements and related notes.
Impact of the COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of COVID-19 pandemic, which continues to spread throughout the U.S. and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures and associated compliance, we do expect the current environment will negatively impact our revenues and other financial results for fiscal 2020.
Because an increasing portion of our revenues are recurring, the effect of COVID-19 on our results of operations may also not be fully reflected for some time. We expect to see some impact on our business in the near term, with delays in government procurement processes, and uncertainty around public sector budgets, as well as delays in implementations caused by travel restrictions, closed offices, or clients shifting focus to more pressing issues. We are working to address those challenges through adapting the way we do business – encouraging web and video conferencing, conducting sales demonstrations and delivering professional services remotely.
Our priorities during this crisis are protecting the health and safety of our employees and our clients. Our IT systems and applications support a remote workforce. Prior to the pandemic, many of our employees worked remotely. In response to the pandemic, we encouraged all employees who are able to do so to work from home, equipping them with resources necessary to continue uninterrupted. We were able to transition the vast majority of our employees to this work-from-home posture. This reduces the number of team members in our offices to those uniquely needed for essential on-site services, such as network operations support staff, and allows for “social distancing” as directed by the Centers for Disease Control ("CDC").
The pandemic has delayed some government procurement processes and is expected to impact our ability to complete certain implementations, negatively impacting our revenue. It could also negatively impact the timing of client payments to us. We continue to monitor these trends in order to respond to the ever-changing impact of COVID-19 on our clients and Tyler’s operations.
For the second quarter of 2020, the impact of the COVID-19 pandemic resulted in lower revenues from software licenses, software services, appraisal services, and other revenues. Lower software licenses compared to prior periods are attributed to slower sales cycles as government procurement processes are delayed and contract signings have been pushed to future periods. Software services and appraisal services revenue declines are attributed to delays in implementations caused by travel restrictions and shelter-in-place orders in effect during the period. Other revenues were lower compared to prior periods primarily as a result of the cancellation of our 2020 Connect user conference. Lower revenues compared to prior periods were offset by cost savings attributed to lower spend on travel, user conferences and trade show expenses, health claims and other employee-related expenses. If and as travel restrictions and shelter-in-place orders are relaxed, we expect software services and appraisal services revenues to increase as the limited number of our clients who insist on or require that all or a portion of their services be delivered onsite will be able to receive those services. Also, we are adapting to the way we do business by encouraging web and video conferencing, conducting virtual sales demonstrations and delivering professional services remotely. Both of those factors result in increases in staff utilization rates and billable time.
Recurring revenues, from subscriptions and maintenance, for the six months ended June 30, 2020, comprised 75% of our total consolidated revenue, and include transaction-based revenue streams such as e-filing and online payments. As of June 30, 2020, we had $472.5 million in cash and investments and no outstanding borrowings under our credit facility. We also have substantial additional liquidity available through our undrawn $400.0 million credit facility, which can be expanded through an accordion feature. During the second quarter of 2020, we completed our annual assessment of goodwill which did not result in an impairment charge. No impairments of other assets were recorded as of the balance sheet date as no triggering events or changes in circumstances occurred as of period-end to require such an impairment; however, due to significant uncertainty surrounding the pandemic and market conditions, management’s judgment regarding this could change in the future.
USE OF ESTIMATES
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognition, determining the nature and timing of satisfaction of performance obligations, determining the standalone selling price ("SSP") of performance obligations, variable consideration, and other obligations such as returns and refunds; loss contingencies; the estimated useful life of deferred commissions; the carrying amount of goodwill; the carrying amount and estimated useful lives of intangible assets; the carrying amount of operating lease right-of-use assets and operating lease liabilities; determining share-based compensation expense; the valuation allowance for receivables; and determining the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns. Actual results could differ from estimates.
REVENUE RECOGNITION
Nature of Products and Services:
We earn revenue from software licenses, royalties, subscription-based services, software services, post-contract customer support (“PCS” or “maintenance”), hardware, and appraisal services. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We determine revenue recognition through the following steps:
•Identification of the contract, or contracts with a customer
•Identification of the performance obligations in the contract
•Determination of the transaction price
•Allocation of the transaction price to the performance obligations in the contract
•Recognition of revenue when, or as, we satisfy a performance obligation
Most of our software arrangements with customers contain multiple performance obligations that range from software licenses, installation, training, and consulting to software modification and customization to meet specific customer needs (services), hosting, and PCS. For these contracts, we account for individual performance obligations separately when they are distinct. We evaluate whether separate performance obligations can be distinct or should be accounted for as one performance obligation. Arrangements that include software services, such as training or installation, are evaluated to determine whether the customer can benefit from the services either on their own or together with other resources readily available to the customer and whether the services are separately identifiable from other promises in the contract. The transaction price is allocated to the distinct performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts. Revenue is recognized net of allowances for sales adjustments and any taxes collected from customers, which are subsequently remitted to governmental authorities.
Significant Judgments:
Our contracts with customers often include multiple performance obligations to a customer. When a software arrangement (license or subscription) includes both software licenses and software services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the software services and recognized over time.
The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, the applications sold, customer demographics, and the number and types of users within our contracts. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine SSP using the expected cost-plus margin approach.
For arrangements that involve significant production, modification or customization of the software, or where software services otherwise cannot be considered distinct, we recognize revenue as control is transferred to the customer over time using progress-to-completion methods. Depending on the contract, we measure progress-to-completion primarily using labor hours incurred, or value added. The progress-to-completion method generally results in the recognition of reasonably consistent profit margins over the life of a contract because we can provide reasonably dependable estimates of contract billings and contract costs. We use the level of profit margin that is most likely to occur on a contract. If the most likely profit margin cannot be precisely determined, the lowest probable level of profit margin in the range of estimates is used until the results can be estimated more precisely. These arrangements are often implemented over an extended time period and occasionally require us to revise total cost estimates. Amounts recognized in revenue are calculated using the progress-to-completion measurement after giving effect to any changes in our cost estimates. Changes to total estimated contract costs, if any, are recorded in the period they are determined. Estimated losses on uncompleted contracts are recorded in the period in which we first determine that a loss is apparent.
Typically, the structure of our arrangements does not give rise to variable consideration. However, in those instances whereby variable consideration exists, we include in our estimates additional revenue for variable consideration when we believe we have an enforceable right, the amount can be estimated reliably and its realization is probable.
Refer to Note 13 - "Disaggregation of Revenue" for further information, including the economic factors that affect the nature, amount, timing, and uncertainty of revenue and cash flows of our various revenue categories.
Contract Balances:
Accounts receivable and allowance for losses and sales adjustments
Timing of revenue recognition may differ from the timing of invoicing to customers. We record an unbilled receivable when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. We record an unbilled receivable related to revenue recognized for on-premises licenses as we have an unconditional right to invoice and receive payment in the future related to those licenses.
At June 30, 2020, and December 31, 2019, total current and long-term accounts receivable, net of allowance for losses and sales adjustments, was $426.9 million and $396.5 million, respectively. We have recorded unbilled receivables of $137.5 million and $134.0 million at June 30, 2020, and December 31, 2019, respectively. Included in unbilled receivables are retention receivables of $13.2 million and $13.1 million at June 30, 2020, and December 31, 2019, respectively, which become payable upon the completion of the contract or completion of our fieldwork and formal hearings. Unbilled receivables expected to be collected within one year have been included with accounts receivable, current portion in the accompanying condensed consolidated balance sheets. Unbilled receivables and retention receivables expected to be collected past one year have been included with accounts receivable, long-term portion in the accompanying condensed consolidated balance sheets.
We maintain allowances for losses and sales adjustments, which losses are recorded against revenue at the time the loss is incurred. Since most of our clients are domestic governmental entities, we rarely incur a credit loss resulting from the inability of a client to make required payments. Events or changes in circumstances that indicate the carrying amount for the allowances for losses and sales adjustments may require revision, include, but are not limited to, managing our client’s expectations regarding the scope of the services to be delivered and defects or errors in new versions or enhancements of our software products. Our allowance for losses and sales adjustments of $9.3 million at June 30, 2020, does not include provisions for credit losses. As of January 1, 2020, we adopted ASU 2016-13 and primarily evaluated our historical experience with credit losses related to trade and other receivables. Because we have not experienced any historical credit losses with the majority of our clients, we have no basis to record a reserve for credit losses as defined by the standard.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
We assess goodwill for impairment annually as of April 1st, or more frequently whenever events or changes in circumstances indicate its carrying value may not be recoverable. We begin with the qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value before applying the quantitative assessment described below. If it is determined through the evaluation of events or circumstances that the carrying value may not be recoverable, we perform a comparison of the estimated fair value of the reporting unit to which the goodwill has been assigned to the sum of the carrying value of the assets and liabilities of that unit. If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the estimated fair value of that reporting unit, the carrying value of the reporting unit's goodwill is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge. The fair values calculated in our impairment tests are determined using discounted cash flow models involving several assumptions. The assumptions that are used are based upon what we believe a hypothetical marketplace participant would use in estimating fair value. We evaluate the reasonableness of the fair value calculations of our reporting units by comparing the total of the fair value of all of our reporting units to our total market capitalization.
During the second quarter, as part of our annual impairment test, we performed qualitative assessments for all reporting units except for the Data and insights reporting unit. As a result of these qualitative assessments, we determined that it was not more likely than not that an impairment existed; therefore, we did not perform a Step1 quantitative impairment test. We performed a quantitative assessment for goodwill of $75.7 million associated with our Data and insights business unit and concluded no impairment exists as of our annual assessment date. Most of our reporting units are comprised of goodwill relating to a combination of legacy and acquired businesses and as a result, have fair values that substantially exceed their underlying carrying values. Certain reporting units, in particular our Case management and business process management and Data and insights units are comprised entirely of recently acquired businesses and as a result, do not have significant excess fair values over carrying values. As of our annual assessment date, the Case management and business process management and Data and insights business units combined was $152.0 million, or 18%, of total goodwill as of June 30, 2020.
Determining the fair value of our reporting units involves the use of significant estimates and assumptions and considerable management judgment. We base our fair value estimates on assumptions we believe to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Changes in market conditions or other factors outside of our control, such as the COVID-19 pandemic, could cause us to change key assumptions and our judgment about a reporting unit’s prospects. Similarly, in a specific period, a reporting unit could significantly underperform relative to its historical or projected future operating results. Either situation could result in a meaningfully different estimate of the fair value of our reporting units, and a consequent future impairment charge.
Other Intangible Assets
We make judgments about the recoverability of purchased intangible assets other than goodwill whenever events or changes in circumstances indicate that an impairment may exist. Customer base and acquired software each comprise approximately half of our purchased intangible assets other than goodwill. We review our customer turnover each year for indications of impairment. Our customer turnover has historically been very low. If indications of impairment are determined to exist, we measure the recoverability of assets by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the assets exceeds their estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the assets exceeds the fair value of the assets. There have been no impairments of intangible assets in any of the periods presented.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, available for-sale debt securities, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of an allowance for losses. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for a fiscal year beginning after December 15, 2018, including interim periods within that fiscal year. Entities apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. As of January 1, 2020, we adopted the new standard with no material impact of credit losses to our trade and other receivables, held-to-maturity debt securities and retained earnings included in our condensed consolidated financial statements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, ("ASU 2019-12") which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company does not expect adoption of this standard to have a material effect on the Company’s consolidated financial statements.
(3) Acquisitions
On February 28, 2019, we acquired all of the capital stock of MP Holdings Parent, Inc. dba MicroPact ("MicroPact"), a leading provider of commercial off-the-shelf solutions, including entellitrak®, a low-code application development platform for case management and business process management used extensively in the public sector. In the six months ended June 30, 2020, we paid $5.6 million in contingent consideration. We have no contingent consideration accrued as of June 30, 2020.
(4) Shareholders’ Equity
The following table details activity in our common stock:
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Three Months Ended June 30,
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Six Months Ended June 30,
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2020
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2019
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2020
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2019
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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Purchases of treasury shares
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—
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$
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—
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—
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$
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—
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(59)
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$
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(15,482)
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(72)
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$
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(14,289)
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Stock option exercises
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436
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46,101
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203
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15,604
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917
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92,337
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297
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22,132
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Employee stock plan purchases
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10
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2,708
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13
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2,260
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20
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5,177
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28
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4,609
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Restricted stock units vested, net of withheld shares upon award settlement
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33
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$
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(4,591)
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27
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$
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(2,008)
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43
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$
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(6,892)
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37
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$
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(3,381)
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As of June 30, 2020, we have authorization from our board of directors to repurchase up to 2.6 million additional shares of our common stock.
(5) Deferred Commissions
Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized commensurate with the recognition of associated revenue over a period of benefit that we have determined to be three to seven years. Deferred commissions were $30.2 million and $29.8 million as of June 30, 2020, and December 31, 2019, respectively. Amortization expense was $3.6 million and $7.5 million for the three and six months ended June 30, 2020, respectively, and $4.1 million and $7.9 million for the three and six months ended June 30, 2019, respectively. There were no indicators of impairment in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses for the current portion and non-current other assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.
(6) Other Assets
As of June 30, 2020, we have $121.2 million in investment grade corporate and municipal bonds with varying maturity dates through 2024. We intend to hold these bonds to maturity and have classified them as such. We believe cost approximates fair value because of the relatively short duration of these investments. The fair values of these securities are considered Level II as they are based on inputs from quoted prices in markets that are not active or other observable market data. These investments are presented at amortized cost and are included in short-term investments and non-current investments and other assets in the accompanying condensed consolidated balance sheets. As of June 30, 2020, we have an accrued interest receivable balance of $584,000 which is included in accounts receivable, net. We do not measure an allowance for credit losses for accrued interest receivables. We record any losses within the maturity period of the investment and any write-offs to accrued interest receivables are recorded as a reduction to interest income in the period of the loss. During the three and six months ended June 30, 2020, we have recorded no credit losses. Interest income and amortization of discounts and premiums are included in other income (expense), net in the accompanying condensed consolidated statements of income.
During the six months ended June 30, 2020, we sold our $15 million investment in convertible preferred stock representing a 20% interest in Record Holdings Pty Limited ("Record Holdings"), a privately held Australian company specializing in digitizing the spoken word in court and legal proceedings, to BFTR, LLC, a wholly owned subsidiary of Bison Capital Partners V L.P. During the same period, we purchased $10 million in common stock representing a 18% interest in BFTR, LLC. The investment in common stock is accounted under the cost method because we do not have the ability to exercise significant influence over the investee and the securities do not have readily determinable fair values. Our investment is carried at cost less any impairment write-downs. Annually, our cost method investments are assessed for impairment. We do not reassess the fair value of cost method investments if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investments. No events or changes in have occurred during the period that require reassessment. This investment is included in non-current investments and other assets in the accompanying condensed consolidated balance sheets.
(7) Revolving Line of Credit
On September 30, 2019, we entered into a $400 million credit agreement with various lender parties and Wells Fargo Bank, National Association, as Administrative Agent (the “Credit Facility”). The Credit Facility provides for a revolving credit line up to $400 million, including a $25 million sublimit for letters of credit. The Credit Facility matures on September 30, 2024.
Borrowings under the Credit Facility bear interest at a rate of either (1) Wells Fargo Bank’s prime rate (subject to certain higher rate determinations) plus a margin of 0.125% to 0.75% or (2) the one-, two-, three-, or six-month LIBOR rate plus a margin of 1.125% to 1.75%. As of June 30, 2020, the interest rates were 3.38% under the Wells Fargo Bank's prime rate and approximately 1.29% under the 30-day LIBOR option. The Credit Facility requires us to maintain certain financial ratios and other financial conditions and prohibits us from making certain investments, advances, cash dividends or loans, and limits incurrence of additional indebtedness and liens. As of June 30, 2020, we were in compliance with those covenants.
As of June 30, 2020, we had no outstanding borrowings under the Credit Facility, and available borrowing capacity was $400.0 million.
(8) Income Tax Provision
We had an effective income tax rate of negative 28.9% and negative 32.3% for the three and six months ended June 30, 2020, respectively compared to 12.1% and 17.0% for the three and six months ended June 30, 2019, respectively. The decrease in the effective tax rates for the three and six months ended June 30, 2020, as compared to the same periods in 2019, was principally driven by an increase in the excess tax benefits related to stock incentive awards.
The effective income tax rates for the periods presented were different from the statutory United States federal income tax rate of 21% due to excess tax benefits related to stock incentive awards, state income taxes, non-deductible business expenses, and the tax benefit of research tax credits. The excess tax benefits related to stock incentive awards realized was $23.4 million and $45.5 million for the three and six months ended June 30, 2020, respectively, compared to $5.4 million and $7.0 million for the three and six months ended June 30, 2019, respectively. Excluding the excess tax benefits, the effective tax rate was 27.2% and 27.1% for the three and six months ended June 30, 2020, respectively, compared to 26.9% and 26.8% for the three and six months ended June 30, 2019, respectively.
We made tax payments of $422,000 and $14.8 million in the six months ended June 30, 2020, and 2019, respectively.
The Coronavirus Aid, Relief and Economic Security ("CARES") Act, which was signed into law on March 27, 2020, provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the U.S. economy. The assistance includes tax relief and government loans, and investments and grants for entities in affected industries (e.g., health care and airlines). The business tax provisions of the CARES Act include temporary changes to income and non-income based tax laws, including the ability to utilize net operating losses, interest expense deductions, alternative minimum tax credit refunds, charitable contributions, and depreciation of qualified improvement property. Measures not related to income-based taxes include (1) allowing an employer to pay its share of Social Security payroll taxes that would otherwise be due from the date of enactment through December 31, 2020, over the following two years and (2) allowing eligible employers subject to closure due to the COVID-19 pandemic to receive a 50% credit on qualified wages against their employment taxes each quarter, with any excess credits eligible for refunds. We evaluated the CARES Act provisions and the enactment resulted in no cumulative adjustments to income taxes. We also do not believe that the income tax implications will be significant to our overall income tax liabilities going forward.
(9) Earnings Per Share
The following table details the reconciliation of basic earnings per share to diluted earnings per share:
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Three Months Ended June 30,
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Six Months Ended June 30,
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2020
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2019
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2020
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2019
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Numerator for basic and diluted earnings per share:
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Net income
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$
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53,892
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$
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31,999
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$
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101,442
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$
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59,347
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Denominator:
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Weighted-average basic common shares outstanding
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39,963
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38,402
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39,984
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38,462
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Assumed conversion of dilutive securities:
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Stock awards
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1,453
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1,411
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1,548
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1,344
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Denominator for diluted earnings per share
- Adjusted weighted-average shares
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41,416
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39,813
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41,532
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39,806
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Earnings per common share:
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Basic
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$
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1.35
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$
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0.83
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$
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2.54
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$
|
1.54
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Diluted
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$
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1.30
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$
|
0.80
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|
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$
|
2.44
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|
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$
|
1.49
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For the three and six months ended June 30, 2020, and June 30, 2019, stock awards representing the right to purchase common stock of approximately 124,000 and 102,000 shares and 750,000 and 1.0 million shares, respectively, were not included in the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.
(10) Leases
We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements and they expire from one year to eight years. Some of these leases include options to extend for up to 10 years. We had no finance leases and no related party lease agreements as of June 30, 2020. Operating lease costs were approximately $2.5 million and $5.1 million for the three and six months ended June 30, 2020, respectively, and $2.6 million and $4.7 million for the three and six months ended June 30, 2019, respectively.
The components of operating lease expense were as follows:
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|
|
Lease Costs
|
|
Financial Statement Classification
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Operating lease cost
|
|
Selling, general and administrative expenses
|
|
$
|
1,606
|
|
|
$
|
1,664
|
|
|
$
|
3,272
|
|
|
$
|
3,034
|
|
|
Short-term lease cost
|
|
Selling, general and administrative expenses
|
|
447
|
|
|
593
|
|
|
1,021
|
|
|
1,163
|
|
|
Variable lease cost
|
|
Selling, general and administrative expenses
|
|
454
|
|
|
368
|
|
|
848
|
|
|
531
|
|
|
Net lease cost
|
|
|
|
$
|
2,507
|
|
|
$
|
2,625
|
|
|
$
|
5,141
|
|
|
$
|
4,728
|
|
Right-of-use ("ROU") lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
|
Assets:
|
|
|
|
|
|
Operating lease right-of-use assets
|
|
$
|
16,659
|
|
|
$
|
18,992
|
|
|
Liabilities:
|
|
|
|
|
|
Operating leases, short-term
|
|
6,217
|
|
|
6,387
|
|
|
Operating leases, long-term
|
|
14,126
|
|
|
16,822
|
|
|
Total lease liabilities
|
|
$
|
20,343
|
|
|
$
|
23,209
|
|
Supplemental information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Information
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
Cash flows:
|
|
|
|
|
|
Cash amounts paid included in the measurement of lease liabilities:
|
|
|
|
|
|
Operating cash outflows from operating leases
|
|
$
|
3,379
|
|
|
$
|
3,362
|
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange for lease obligations (non-cash):
|
|
|
|
|
|
Operating leases
|
|
$
|
510
|
|
|
$
|
2,099
|
|
|
|
|
|
|
|
|
Lease term and discount rate:
|
|
|
|
|
|
Weighted average remaining lease term (years)
|
|
4
|
|
5
|
|
Weighted average discount rate
|
|
4.00
|
%
|
|
4.00
|
%
|
As of June 30, 2020, maturities of lease liabilities were as follows:
|
|
|
|
|
|
|
|
|
|
|
Year ending December 31,
|
|
Amount
|
|
2020 (Remaining 2020)
|
|
$
|
3,978
|
|
|
2021
|
|
6,372
|
|
|
2022
|
|
4,049
|
|
|
2023
|
|
3,014
|
|
|
2024
|
|
2,555
|
|
|
Thereafter
|
|
2,130
|
|
|
Total lease payments
|
|
22,098
|
|
|
Less: Interest
|
|
(1,755)
|
|
|
Present value of operating lease liabilities
|
|
$
|
20,343
|
|
Rental Income from third parties
We own office buildings in Bangor, Falmouth and Yarmouth, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; and Moraine, Ohio. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2020 and 2025, and some have options to extend the lease for up to five years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.
Rental income from third-party tenants for the three and six months ended June 30, 2020, totaled $292,000 and $566,000, respectively, and for the three and six months ended June 30, 2019, totaled $270,000 and $554,000, respectively. Rental income is included in Hardware and other revenue on the condensed consolidated statements of income. As of June 30, 2020, future minimum operating rental income based on contractual agreements is as follows:
|
|
|
|
|
|
|
|
|
|
|
Year ending December 31,
|
|
Amount
|
|
2020 (Remaining 2020)
|
|
$
|
696
|
|
|
2021
|
|
1,372
|
|
|
2022
|
|
1,402
|
|
|
2023
|
|
1,432
|
|
|
2024
|
|
1,462
|
|
|
Thereafter
|
|
858
|
|
|
Total
|
|
$
|
7,222
|
|
As of June 30, 2020, we had no additional significant operating or finance leases that had not yet commenced.
(11) Share-Based Compensation
The following table summarizes share-based compensation expense related to share-based awards recorded in the condensed consolidated statements of income, pursuant to ASC 718, Stock Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Cost of subscriptions, software services and maintenance
|
|
$
|
4,369
|
|
|
$
|
3,756
|
|
|
$
|
8,621
|
|
|
$
|
7,554
|
|
|
Selling, general and administrative expenses
|
|
14,017
|
|
|
11,310
|
|
|
27,067
|
|
|
21,928
|
|
|
Total share-based compensation expense
|
|
$
|
18,386
|
|
|
$
|
15,066
|
|
|
$
|
35,688
|
|
|
$
|
29,482
|
|
(12) Segment and Related Information
We provide integrated information management solutions and services for the public sector, with a focus on local governments.
We provide our software systems and services and appraisal services through six business units, which focus on the following products:
•financial management, education and planning, regulatory and maintenance software solutions;
•financial management, municipal courts, planning, regulatory and maintenance management software solutions;
•courts and justice and public safety software solutions;
•data and insights solutions;
•case management and business management solutions; and
•appraisal and tax software solutions, property appraisal services and land and vital records management software solutions.
In accordance with ASC 280-10, Segment Reporting, the financial management, education and planning, regulatory and maintenance software solutions unit; financial management, municipal courts, planning, regulatory and maintenance, and land and vital records management software solutions unit; courts and justice and public safety software solutions unit; the data and insights solutions unit; and case management and business management solutions units meet the criteria for aggregation and are presented in one reportable segment, the Enterprise Software (“ES”) segment. The ES segment provides public sector entities with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as: financial management and education, courts and justice, public safety, planning, regulatory and maintenance, and data and insights. The Appraisal and Tax (“A&T”) segment provides systems and software that automate the appraisal and assessment of real and personal property, land and vital records management as well as property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction.
We evaluate performance based on several factors, of which the primary financial measure is business segment operating income. We define segment operating income for our business units as income before non-cash amortization of intangible assets associated with their acquisitions, interest expense and income taxes. Segment operating income includes intercompany transactions. The majority of intercompany transactions relate to contracts involving more than one unit and are valued based on the contractual arrangement. Segment operating income for Corporate primarily consists of compensation costs for the executive management team and certain accounting and administrative staff and share-based compensation expense for the entire company. Corporate segment operating income also includes revenues and expenses related to a company-wide user conference. Due to the shelter-in-place orders caused by the COVID-19 pandemic, we cancelled our company-wide user conference for the current year.
As of January 1, 2020, the land and vital records management business unit, which was previously reported in the ES segment, was moved to the A&T segment. These changes were made to reflect changes in the way in which management makes operating decisions, allocates resources, and manages the growth and profitability of the Company. Prior year amounts for the ES and A&T segments have been adjusted to reflect the segment change.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise
Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
14,683
|
|
|
$
|
2,342
|
|
|
$
|
—
|
|
|
$
|
17,025
|
|
|
Subscriptions
|
|
79,128
|
|
|
6,510
|
|
|
—
|
|
|
85,638
|
|
|
Software services
|
|
38,899
|
|
|
4,755
|
|
|
—
|
|
|
43,654
|
|
|
Maintenance
|
|
107,336
|
|
|
9,424
|
|
|
—
|
|
|
116,760
|
|
|
Appraisal services
|
|
—
|
|
|
4,696
|
|
|
—
|
|
|
4,696
|
|
|
Hardware and other
|
|
3,300
|
|
|
18
|
|
|
—
|
|
|
3,318
|
|
|
Intercompany
|
|
4,533
|
|
|
2
|
|
|
(4,535)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
247,879
|
|
|
$
|
27,747
|
|
|
$
|
(4,535)
|
|
|
$
|
271,091
|
|
|
Segment operating income
|
|
$
|
69,025
|
|
|
$
|
6,148
|
|
|
$
|
(20,434)
|
|
|
$
|
54,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise
Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
17,555
|
|
|
$
|
3,120
|
|
|
$
|
—
|
|
|
$
|
20,675
|
|
|
Subscriptions
|
|
69,386
|
|
|
4,089
|
|
|
—
|
|
|
73,475
|
|
|
Software services
|
|
48,404
|
|
|
8,997
|
|
|
—
|
|
|
57,401
|
|
|
Maintenance
|
|
97,641
|
|
|
9,048
|
|
|
—
|
|
|
106,689
|
|
|
Appraisal services
|
|
—
|
|
|
6,233
|
|
|
—
|
|
|
6,233
|
|
|
Hardware and other
|
|
4,493
|
|
|
5
|
|
|
6,153
|
|
|
10,651
|
|
|
Intercompany
|
|
3,576
|
|
|
84
|
|
|
(3,660)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
241,055
|
|
|
$
|
31,576
|
|
|
$
|
2,493
|
|
|
$
|
275,124
|
|
|
Segment operating income
|
|
$
|
59,668
|
|
|
$
|
7,923
|
|
|
$
|
(17,671)
|
|
|
$
|
49,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
30,634
|
|
|
$
|
5,128
|
|
|
$
|
—
|
|
|
$
|
35,762
|
|
|
Subscriptions
|
|
$
|
155,772
|
|
|
$
|
11,589
|
|
|
—
|
|
|
$
|
167,361
|
|
|
Software services
|
|
$
|
83,848
|
|
|
$
|
11,939
|
|
|
—
|
|
|
$
|
95,787
|
|
|
Maintenance
|
|
$
|
212,177
|
|
|
$
|
18,948
|
|
|
—
|
|
|
$
|
231,125
|
|
|
Appraisal services
|
|
$
|
0
|
|
|
$
|
10,459
|
|
|
—
|
|
|
$
|
10,459
|
|
|
Hardware and other
|
|
$
|
7,091
|
|
|
$
|
45
|
|
|
$
|
2
|
|
|
$
|
7,138
|
|
|
Intercompany
|
|
8,534
|
|
|
20
|
|
|
(8,554)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
498,056
|
|
|
$
|
58,128
|
|
|
$
|
(8,552)
|
|
|
$
|
547,632
|
|
|
Segment operating income
|
|
$
|
129,497
|
|
|
$
|
13,056
|
|
|
$
|
(40,502)
|
|
|
$
|
102,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
36,077
|
|
|
$
|
6,391
|
|
|
$
|
—
|
|
|
$
|
42,468
|
|
|
Subscriptions
|
|
132,641
|
|
|
8,109
|
|
|
—
|
|
|
140,750
|
|
|
Software services
|
|
88,860
|
|
|
16,984
|
|
|
—
|
|
|
105,844
|
|
|
Maintenance
|
|
188,829
|
|
|
18,012
|
|
|
—
|
|
|
206,841
|
|
|
Appraisal services
|
|
0
|
|
|
11,447
|
|
|
—
|
|
|
11,447
|
|
|
Hardware and other
|
|
8,623
|
|
|
67
|
|
|
6,150
|
|
|
14,840
|
|
|
Intercompany
|
|
7,060
|
|
|
153
|
|
|
(7,213)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
462,090
|
|
|
$
|
61,163
|
|
|
$
|
(1,063)
|
|
|
$
|
522,190
|
|
|
Segment operating income
|
|
$
|
115,142
|
|
|
$
|
15,018
|
|
|
$
|
(34,217)
|
|
|
$
|
95,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
Reconciliation of reportable segment operating income to the Company's consolidated totals:
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Total segment operating income
|
|
$
|
54,739
|
|
|
$
|
49,920
|
|
|
$
|
102,051
|
|
|
$
|
95,943
|
|
|
Amortization of acquired software
|
|
(8,006)
|
|
|
(7,988)
|
|
|
(16,033)
|
|
|
(14,670)
|
|
|
Amortization of customer and trade name intangibles
|
|
(5,392)
|
|
|
(5,266)
|
|
|
(10,784)
|
|
|
(10,116)
|
|
|
Other income (expense), net
|
|
470
|
|
|
(247)
|
|
|
1,460
|
|
|
339
|
|
|
Income before income taxes
|
|
$
|
41,811
|
|
|
$
|
36,419
|
|
|
$
|
76,694
|
|
|
$
|
71,496
|
|
(13) Disaggregation of Revenue
The tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows.
Timing of Revenue Recognition
Timing of revenue recognition by revenue category during the period is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
Products and services transferred at a point in time
|
|
Products and services transferred over time
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
14,468
|
|
|
$
|
2,557
|
|
|
$
|
17,025
|
|
|
Subscriptions
|
|
—
|
|
|
85,638
|
|
|
85,638
|
|
|
Software services
|
|
—
|
|
|
43,654
|
|
|
43,654
|
|
|
Maintenance
|
|
—
|
|
|
116,760
|
|
|
116,760
|
|
|
Appraisal services
|
|
—
|
|
|
4,696
|
|
|
4,696
|
|
|
Hardware and other
|
|
3,318
|
|
|
—
|
|
|
3,318
|
|
|
Total
|
|
$
|
17,786
|
|
|
$
|
253,305
|
|
|
$
|
271,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
Products and services transferred at a point in time
|
|
Products and services transferred over time
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
15,802
|
|
|
$
|
4,873
|
|
|
$
|
20,675
|
|
|
Subscriptions
|
|
—
|
|
|
73,475
|
|
|
73,475
|
|
|
Software services
|
|
—
|
|
|
57,401
|
|
|
57,401
|
|
|
Maintenance
|
|
—
|
|
|
106,689
|
|
|
106,689
|
|
|
Appraisal services
|
|
—
|
|
|
6,233
|
|
|
6,233
|
|
|
Hardware and other
|
|
10,651
|
|
|
—
|
|
|
10,651
|
|
|
Total
|
|
$
|
26,453
|
|
|
$
|
248,671
|
|
|
$
|
275,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
Products and services transferred at a point in time
|
|
Products and services transferred over time
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
30,534
|
|
|
$
|
5,228
|
|
|
$
|
35,762
|
|
|
Subscriptions
|
|
—
|
|
|
167,361
|
|
|
167,361
|
|
|
Software services
|
|
—
|
|
|
95,787
|
|
|
95,787
|
|
|
Maintenance
|
|
—
|
|
|
231,125
|
|
|
231,125
|
|
|
Appraisal services
|
|
—
|
|
|
10,459
|
|
|
10,459
|
|
|
Hardware and other
|
|
7,138
|
|
|
—
|
|
|
7,138
|
|
|
Total
|
|
$
|
37,672
|
|
|
$
|
509,960
|
|
|
$
|
547,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
Products and services transferred at a point in time
|
|
Products and services transferred over time
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
Software licenses and royalties
|
|
$
|
32,712
|
|
|
$
|
9,756
|
|
|
$
|
42,468
|
|
|
Subscriptions
|
|
—
|
|
|
140,750
|
|
|
140,750
|
|
|
Software services
|
|
—
|
|
|
105,844
|
|
|
105,844
|
|
|
Maintenance
|
|
—
|
|
|
206,841
|
|
|
206,841
|
|
|
Appraisal services
|
|
—
|
|
|
11,447
|
|
|
11,447
|
|
|
Hardware and other
|
|
14,840
|
|
|
—
|
|
|
14,840
|
|
|
Total
|
|
$
|
47,552
|
|
|
$
|
474,638
|
|
|
$
|
522,190
|
|
Recurring Revenue
The majority of our revenue is comprised of revenues from maintenance and subscriptions, which we consider to be recurring revenue. Virtually all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our on-premises clients under annual, or in some cases, multi-year contracts. The contract terms for subscription arrangements range from one to 10 years but are typically contracted for initial periods of three to five years, providing a significant source of recurring revenues on an annual basis. We consider all other revenue categories to be non-recurring revenues.
Recurring revenues and non-recurring revenues recognized during the period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise
Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
Recurring revenues
|
|
$
|
186,464
|
|
|
$
|
15,934
|
|
|
$
|
—
|
|
|
$
|
202,398
|
|
|
Non-recurring revenues
|
|
56,882
|
|
|
11,811
|
|
|
—
|
|
|
68,693
|
|
|
Intercompany
|
|
4,533
|
|
|
2
|
|
|
(4,535)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
247,879
|
|
|
$
|
27,747
|
|
|
$
|
(4,535)
|
|
|
$
|
271,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise
Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
Recurring revenues
|
|
$
|
167,027
|
|
|
$
|
13,137
|
|
|
$
|
—
|
|
|
$
|
180,164
|
|
|
Non-recurring revenues
|
|
70,452
|
|
|
18,355
|
|
|
6,153
|
|
|
94,960
|
|
|
Intercompany
|
|
3,576
|
|
|
84
|
|
|
(3,660)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
241,055
|
|
|
$
|
31,576
|
|
|
$
|
2,493
|
|
|
$
|
275,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise
Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
Recurring revenues
|
|
$
|
367,949
|
|
|
$
|
30,537
|
|
|
$
|
—
|
|
|
$
|
398,486
|
|
|
Non-recurring revenues
|
|
121,573
|
|
|
27,571
|
|
|
2
|
|
|
149,146
|
|
|
Intercompany
|
|
8,534
|
|
|
20
|
|
|
(8,554)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
498,056
|
|
|
$
|
58,128
|
|
|
$
|
(8,552)
|
|
|
$
|
547,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise
Software
|
|
Appraisal and Tax
|
|
Corporate
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
Recurring revenues
|
|
$
|
321,470
|
|
|
$
|
26,121
|
|
|
$
|
—
|
|
|
$
|
347,591
|
|
|
Non-recurring revenues
|
|
133,560
|
|
|
34,889
|
|
|
6,150
|
|
|
174,599
|
|
|
Intercompany
|
|
7,060
|
|
|
153
|
|
|
(7,213)
|
|
|
—
|
|
|
Total revenues
|
|
$
|
462,090
|
|
|
$
|
61,163
|
|
|
$
|
(1,063)
|
|
|
$
|
522,190
|
|
(14) Deferred Revenue and Performance Obligations
Total deferred revenue, including long-term, by segment is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
|
Enterprise Software
|
|
$
|
396,405
|
|
|
$
|
375,838
|
|
|
Appraisal and Tax
|
|
25,437
|
|
|
35,487
|
|
|
Corporate
|
|
1,362
|
|
|
1,369
|
|
|
Totals
|
|
$
|
423,204
|
|
|
$
|
412,694
|
|
Changes in total deferred revenue, including long-term, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2020
|
|
Balance as of December 31, 2019
|
|
$
|
412,694
|
|
|
Deferral of revenue
|
|
508,126
|
|
|
Recognition of deferred revenue
|
|
(497,616)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2020
|
|
$
|
423,204
|
|
Transaction Price Allocated to the Remaining Performance Obligations
The aggregate amount of transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized ("backlog"), which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Backlog as of June 30, 2020, was $1.54 billion, of which we expect to recognize approximately 49% as revenue over the next 12 months and the remainder thereafter.
(15) Commitments and Contingencies
Other than routine litigation incidental to our business, there are no material legal proceedings pending to which we are party or to which any of our properties are subject.
(16) Subsequent Events
There have been no material events and transactions that occurred subsequent to June 30, 2020.