Revenue Recognition

6 Months Ended

Jan. 31, 2020

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

Note 2—Revenue Recognition

The Company earns revenue from contracts with customers, primarily through the provision of retail telecommunications and payment offerings as well as wholesale international long-distance traffic termination. The Company has two reportable business segments, Telecom & Payment Services and net2phone. The Telecom & Payment Services segment is comprised of Core and Growth verticals. Core includes BOSS Revolution Calling, an international long-distance calling service marketed primarily to immigrant communities in the United States, Carrier Services, which provides international long-distance termination and outsourced traffic management solutions to telecoms worldwide, and Mobile Top-Up, which enables customers to transfer airtime and bundles of airtime, messaging and data credits to mobile accounts internationally and domestically. Core also includes smaller communications and payment offerings, many in harvest mode. Growth includes National Retail Solutions, which operates a point-of-sale terminal-based network for independent retailers, BOSS Revolution Money Transfer, an international money remittance service for customers in the United States, and BOSS Revolution Mobile, a mobile virtual network operator in the United States. The net2phone segment is comprised of net2phone-Unified Communications as a Service ("UCaaS"), a unified cloud-based communications service for businesses in North and South America and certain other international markets, and net2phone-Platform Services, which provides telephony services to cable operators and other businesses by leveraging a common technology platform.

The Company's core operations are mostly minute-based, paid-voice communications services, and revenue is primarily recognized at a point in time. The Company's Telecom & Payment Services' growth initiatives and net2phone-UCaaS are technology-driven, synergistic businesses that leverage the Company's core assets, and revenue, in some cases, is recognized over time. The Company's most significant revenue streams are from BOSS Revolution Calling, Mobile Top-Up, and Carrier Services. BOSS Revolution Calling and Mobile Top-Up are sold direct-to-consumers and through distributors and retailers.

Disaggregated Revenues

The following table shows the Company's revenues disaggregated by business segment and service offered to customers:

	Three Months Ended January 31,				Six Months Ended January 31,
	2020		2019		2020		2019
	(in thousands)
Core Operations:
Boss Revolution Calling	$	112,775	$	122,146	$	229,016	$	245,659
Carrier Services		101,659		127,896		215,176		270,118
Mobile Top-Up		75,818		64,276		152,633		129,623
Other		10,951		16,770		22,357		31,527
Growth		9,777		6,862		19,370		12,872
Total Telecom & Payment Services		310,980		337,950		638,552		689,799
net2phone-UCaaS		7,939		6,027		15,161		10,832
net2phone-Platform Services		4,971		5,496		10,376		11,158
Total net2phone		12,910		11,523		25,537		21,990
Total	$	323,890	$	349,473	$	664,089	$	711,789

The following table shows the Company's revenues disaggregated by geographic region, which is determined based on selling location:

(in thousands)	Telecom & Payment Services		net2phone		Total
Three Months Ended January 31, 2020
United States	$	210,990	$	8,575	$	219,565
Outside the United States:
United Kingdom		36,151		3		36,154
Netherlands		49,692		—		49,692
Other		14,147		4,332		18,479
Total outside the United States		99,990		4,335		104,325
Total	$	310,980	$	12,910	$	323,890

(in thousands)	Telecom & Payment Services		net2phone		Total
Three Months Ended January 31, 2019
United States	$	225,246	$	8,094	$	233,340
Outside the United States:
United Kingdom		48,939		8		48,947
Netherlands		48,057		—		48,057
Other		15,708		3,421		19,129
Total outside the United States		112,704		3,429		116,133
Total	$	337,950	$	11,523	$	349,473

(in thousands)	Telecom & Payment Services		net2phone		Total
Six Months Ended January 31, 2020
United States	$	429,599	$	17,108	$	446,707
Outside the United States:
United Kingdom		71,943		7		71,950
Netherlands		104,634		—		104,634
Other		32,376		8,422		40,798
Total outside the United States		208,953		8,429		217,382
Total	$	638,552	$	25,537	$	664,089

(in thousands)	Telecom & Payment Services		net2phone		Total
Six Months Ended January 31, 2019
United States	$	456,870	$	16,024	$	472,894
Outside the United States:
United Kingdom		99,411		16		99,427
Netherlands		98,979		—		98,979
Other		34,539		5,950		40,489
Total outside the United States		232,929		5,966		238,895
Total	$	689,799	$	21,990	$	711,789

Remaining Performance Obligations

The Company's revenue is generally recognized in the same period that its performance obligations are satisfied. The Company does not have any significant revenue from performance obligations satisfied or partially satisfied in previous reporting periods. The Company's remaining performance obligations at January 31, 2020 had an original expected duration of one year or less.

Accounts Receivable and Contract Balances

The timing of revenue recognition may differ from the time of billing to the Company's customers. Trade accounts receivable in the Company's consolidated balance sheets represent unconditional rights to consideration. An entity records a contract asset when revenue is recognized in advance of the entity's right to bill and receive consideration. The Company has not identified any contract assets.

Contract liabilities arise when the Company receives consideration or bills its customers prior to providing the goods or services promised in the contract. The primary component of the Company's contract liability balance is the payments received for its prepaid BOSS Revolution Calling, traditional calling cards, and Mobile Top-Up services. Contract liabilities are recognized as revenue when services are provided to the customer. The contract liability balances are presented in the Company's consolidated balance sheet as "Deferred revenue".

The following table presents information about the Company's contract liability balance:

	Three Months Ended January 31,				Six Months Ended January 31,
	2020		2019		2020		2019
	(in thousands)
Revenue recognized in the period from amounts included in the contract liability balance at the beginning of the period	$	28,586	$	28,502	$	34,234	$	36,177

Deferred Customer Contract Acquisition and Fulfillment Costs

The Company recognizes as an asset its incremental costs of obtaining a contract with a customer that it expects to recover. The Company charges its direct costs to fulfill contracts to expense as incurred. The Company's incremental costs of obtaining a contract with a customer are sales commissions paid to acquire customers. For Telecom & Payment Services, the Company applies the practical expedient whereby the Company primarily charges these costs to expense when incurred because the amortization period would be one year or less for the asset that would have been recognized from deferring these costs. For net2phone-UCaaS sales, employees and third parties receive commissions on sales to end users. The Company amortizes the deferred costs over the expected customer relationship period when it is expected to exceed one year.

The Company's deferred customer contract acquisition costs were as follows:

	January 31, 2020		July 31, 2019
	(in thousands)
Deferred customer contract acquisition costs included in "Other current assets"	$	1,992	$	1,474
Deferred customer contract acquisition costs included in "Other assets"		2,069		1,716
Total	$	4,061	$	3,190

The Company's amortization of deferred customer contract acquisition costs during the periods were as follows:

	Three Months Ended January 31,				Six Months Ended January 31,
	2020		2019		2020		2019
	(in thousands)
Amortization of deferred customer contract acquisition costs	$	615	$	557	$	1,166	$	752