Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company generated 81% and 80% of its revenue from U.S. domestic sales for the three and nine months ended September 30, 2023. The remaining 19% and 20% of revenue was generated from non-U.S. sales for the three and nine months ended September 30, 2023. For the three and nine months ended September 30, 2022, 84% and 81% of revenue was from U.S. domestic sales and the remaining 16% and 19% of revenue was generated from non-U.S. sales.

For the three and nine months ended September 30, 2023, the Company recognized 53% and 55% of its revenue over time as control of the services and goods transferred to the customer, and the remaining 47% and 45% at a point in time, when the customer obtained control of the promised goods. For the three and nine months ended September 30, 2022, the Company recognized 55% and 58% of its revenue over time, and the remaining 45% and 42% at a point in time.

Contract Assets. As of September 30, 2023, the Company recognized a contract asset of $42.8 million related to a contract at a Kaplan International business, which is included in Deferred Charges and Other Assets. The Company expects to recognize an additional $300.9 million related to this contract over the next six years. As of December 31, 2022, the contract asset was $26.3 million.

Deferred Revenue. The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance, including amounts which are refundable. The following table presents the change in the Company’s deferred revenue balance:

	As of
	September 30, 2023		December 31, 2022		%
(in thousands)					Change
Deferred revenue	$	418,831	$	385,507	9

In April 2020, GHG received $31.5 million under the expanded Medicare Accelerated and Advanced Payment Program modified by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as a result of COVID-19. The Department of Health and Human Services started to recoup this advance 365 days after the payment was issued. The advance has been recouped in full as of September 30, 2022. For the three and nine months ended September 30, 2022, GHG recognized $0.5 million and $12.5 million of the balance in revenue for claims submitted for eligible services.

The majority of the change in the deferred revenue balance is related to the cyclical nature of services in the Kaplan international division. During the nine months ended September 30, 2023, the Company recognized $313.0 million related to the Company’s deferred revenue balance as of December 31, 2022.

Revenue allocated to remaining performance obligations represents deferred revenue amounts that will be recognized as revenue in future periods. As of September 30, 2023, the deferred revenue balance related to certain medical and nursing qualifications with an original contract length greater than twelve months at Kaplan Supplemental Education was $7.4 million. Kaplan Supplemental Education expects to recognize 66% of this revenue over the next twelve months and the remainder thereafter.

Costs to Obtain a Contract. The following table presents changes in the Company’s costs to obtain a contract asset:

(in thousands)	Balance at Beginning of Period		Costs associated with new contracts		Less: Costs amortized during the period		Other		Balance at End of Period
2023	$	31,647	$	40,999	$	(53,601)	$	275	$	19,320

The majority of other activity was related to currency translation adjustments for the nine months ended September 30, 2023.