Anuvu Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Revenue Recognition

Revenue Recognition

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

On January 1, 2018, the Company adopted ASU 2014-09 using the modified retrospective method and applied it to contracts which were not completed as of January 1, 2018.

The following table represents a disaggregation of the Company’s revenue from contracts with customers for the twelve months ended December 31, 2019 and 2018 (in thousands):



	Twelve Months Ended December 31,
	2019		2018
Revenue:
Media & Content
Licensing & Services	$	311,079	$	315,409
Total Media & Content	311,079		315,409

Connectivity
Aviation Services	$	124,884	$	120,130
Aviation Equipment	54,159		30,518
Maritime & Land Services	156,199		170,688
Maritime & Land Equipment	10,556		10,349
Total Connectivity	345,798		331,685

Total revenue	$	656,877	$	647,094

Contract Assets and Liabilities

Aviation connectivity contracts involve performance obligations primarily relating to the delivery of equipment and services. Equipment is delivered upfront with payment due upon delivery. Services are rendered to the customer over time and are typically paid for upfront or as the services are delivered. Aviation connectivity revenue is allocated based upon SSP. The primary method used to estimate the SSP is the expected cost-plus margin approach. When the SSP exceeds the revenue allocation, the revenue to which the Company is entitled is contingent on performing the ongoing connectivity services and the Company records a contract asset accordingly.

The following table summarizes the significant changes in the balance for contract assets during the year ended December 31, 2019 (in thousands):



	Contract Assets
Balance as of December 31, 2018	$	4,696
Increase in contract assets primarily due to revenue recognized in excess of billings	9,734
Balance as of December 31, 2019	$	14,431

Current contract assets	$	4,399
Non-current contract assets	10,032
Balance as of December 31, 2019	$	14,431

The Company may invoice upfront for services recognized over time or for contracts in which it has unsatisfied performance obligations. Contract payment terms are generally 30 to 45 days. When the timing of invoicing differs from the timing of revenue recognition, the Company determines its contracts to include a financing component when the contractual term is for more than a year.

The following table summarizes the significant changes in the balance for contract liabilities, included within “Other non-current liabilities” in our consolidated balance sheet, during the year ended December 31, 2019 (in thousands):



	Contract Liabilities
Balance as of December 31, 2018	$	8,546
Revenue recognized that was included in the contract liability balance at the beginning of the period	(8,054		)
Increase due to cash received, excluding amounts recognized as revenue during the period	11,911
Balance as of December 31, 2019	$	12,403

Deferred revenue, current	$	12,317
Deferred revenue, non-current	86
Balance as of December 31, 2019	$	12,403

As of December 31, 2019, the Company had $968.5 million of remaining performance obligations, which it also refers to as total backlog. The Company expects to recognize approximately 23% of its remaining performance obligations as revenue in 2020 approximately 18% in 2021, 15% by 2022, and the remaining balance thereafter.

$8.1 million and $6.5 million of services revenue was recognized during the years ended December 31, 2019 and 2018, respectively, and was included in the deferred revenue balances at the beginning of the respective period.

Accounts Receivable, net

The Company extends credit to its customers from time to time. The Company maintains an allowance for doubtful accounts for estimated losses resulting from its customers’ inability to make required payments. Management analyzes the age of customer balances, historical bad debt experience, customer creditworthiness and changes in customer payment terms when making estimates of the collectability of its accounts receivable balances. If management determines that the financial condition of any of its customers has deteriorated, whether due to customer specific or general economic issues, an increase in the allowance may be made. After all attempts to collect a receivable have failed, the receivable is written off.

Accounts receivable consist of the following (in thousands):



	December 31,			December 31,
	2019			2018
Accounts receivable, gross	$	94,995		$	103,301
Less: Allowance for doubtful accounts	(6,776		)	(5,678		)
Accounts receivable, net	$	88,219		$	97,623

Movements in the balance for allowance for doubtful accounts for the twelve months ended December 31, 2019 and 2018 are as follows (in thousands):




	2019			2018
Beginning balance	$	5,678		$	8,680
Additions charged to statements of operations	4,616			1,227
Less: Bad debt write offs	(3,518		)	(4,229		)
Ending balance	$	6,776		$	5,678

Capitalized Contract Costs

Certain of the Company’s sales incentive programs meet the requirements to be capitalized as incremental costs of obtaining a contract. The Company recognizes an asset for the incremental costs if it expects the benefit of those costs to be longer than one year and amortize those costs over the expected customer life. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less.

Additionally, the Company capitalizes assets associated with costs incurred to fulfill a contract with a customer. For example, the Company capitalizes the costs incurred to obtain necessary STC or other customer-specific certifications for its aviation, maritime and land customers.

The following table summarizes the significant changes in the contract assets balances during the period ended December 31, 2019 (in thousands):



	Contract Assets
	Costs to Obtain			Costs to Fulfill			Total
Balance as of December 31, 2018	$	234		$	4,011		$	4,245
Capitalization during the year	300			2,290			2,590
Amortization during the year	(147		)	(1,045		)	(1,192		)
Balance as of December 31, 2019	$	387		$	5,256		$	5,643

Contract assets are included within Other non-current assets on the Company’s Consolidated Balance Sheets.

Practical Expedients, Policy Elections and Exemptions

In circumstances where shipping and handling activities occur subsequent to the transfer of control, the Company has elected to treat shipping and handling as a fulfillment activity rather than a service to the customer.

The Company has made a policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer (e.g., sales, use, value added, and some excise taxes).

The Company applies a practical expedient to expense costs as incurred for incremental costs to obtain a contract when the amortization period would have been one year or less and did not evaluate contracts of one year or less for variable consideration.