Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2020

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Note 3. Revenue from Contracts with Customers

Revenue by Service Offering

The following table presents revenue by service offering for the three months ended June 30, 2020 and 2019, respectively:

	Three months ended June 30, 2020						Three months ended June 30, 2019
	Residential		Business		Total		Residential		Business		Total
	Subscription		Subscription		Revenue		Subscription		Subscription		Revenue
	(in millions)
HSD	$	115.9	$	21.4	$	137.3	$	110.5	$	19.9	$	130.4
Video		99.0		3.5		102.5		105.9		3.7		109.6
Telephony		13.5		10.6		24.1		15.7		10.7		26.4
Total subscription services revenue	$	228.4	$	35.5	$	263.9	$	232.1	$	34.3	$	266.4
Other business services revenue(1)		—		—		6.4		—		—		7.1
Other revenue		—		—		11.7		—		—		16.2
Total revenue	$	228.4	$	35.5	$	282.0	$	232.1	$	34.3	$	289.7

(1) Includes wholesale and colocation lease revenue of $5.3 million and $5.4 million for the three months ended June 30, 2020 and 2019, respectively.

The following table presents revenue by service offering for the six months ended June 30, 2020 and 2019, respectively:

	Six months ended June 30, 2020							Six months ended June 30, 2019
	Residential		Business		Total			Residential		Business		Total
	Subscription		Subscription		Revenue			Subscription		Subscription		Revenue
	(in millions)
HSD	$	231.2	$	42.7	$	273.9	$	218.6	$	39.3	$	257.9
Video		198.5		7.4		205.9		213.3		7.3		220.6
Telephony		27.5		21.2		48.7		31.7		21.4		53.1
Total subscription services revenue	$	457.2	$	71.3	$	528.5	$	463.6	$	68.0	$	531.6
Other business services revenue(1)		—		—		12.9		—		—		14.2
Other revenue		—		—		25.1		—		—		31.1
Total revenue	$	457.2	$	71.3	$	566.5	$	463.6	$	68.0	$	576.9

(1) Includes wholesale and colocation lease revenue of $10.7 million and $10.9 million for the six months ended June 30, 2020 and 2019, respectively.

Costs of Obtaining Contracts with Customers

The following table summarizes the activity of costs of obtaining contracts with customers:

	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
	(in millions)
Balance at beginning of period	$	43.7	$	29.6	$	40.7	$	26.3
Deferral		4.4		5.0		10.1		9.8
Amortization		(2.9)		(1.8)		(5.6)		(3.3)
Balance at end of period	$	45.2	$	32.8	$	45.2	$	32.8

The following table presents the current and non-current portion of costs of obtaining contracts with customers as of the end of the corresponding periods:

	June 30,  2020		December 31,  2019
	(in millions)
Current costs of obtaining contracts with customers	$	12.0	$	10.0
Non-current costs of obtaining contracts with customers		33.2		30.7
Total costs of obtaining contracts with customers	$	45.2	$	40.7

The current portion and the non-current portion of costs of obtaining contracts with customers are included in prepaid expenses and other and other non-current assets, respectively, in the Company’s unaudited condensed consolidated balance sheets. Amortization of costs of obtaining contracts with customers is included in selling, general and administrative expense in the Company’s unaudited condensed consolidated statements of operations.

Contract Liabilities

The following table summarizes the activity of current and non-current contract liabilities:

	Three months ended				Six months ended
	June 30,					June 30,
	2020		2019		2020		2019
	(in millions)				(in millions)
Balance at beginning of period	$	3.9	$	4.0	$	4.2	$	3.9
Deferral		3.0		4.0		6.7		7.9
Revenue recognized		(3.3)		(3.9)		(7.3)		(7.7)
Balance at end of period	$	3.6	$	4.1	$	3.6	$	4.1

The following table presents the current and non-current portion of contract liabilities as of the end of the corresponding periods:

	June 30,  2020		December 31,  2019
	(in millions)
Current contract liabilities	$	3.0	$	3.6
Non-current contract liabilities		0.6		0.6
Total contract liabilities	$	3.6	$	4.2

The current and the non-current portion of contract liabilities are included in the current portion of unearned service revenue and other non-current liabilities, respectively, in the Company’s unaudited condensed consolidated balance sheets.

Unsatisfied Performance Obligations

Revenue from month-to-month residential subscription service contracts have historically represented a significant portion of the Company’s revenue and the Company expects that this will continue to be the case in future periods.  All residential subscription service performance obligations will be satisfied within one year.

A summary of expected business revenue to be recognized in future periods related to performance obligations which have not been satisfied or are partially unsatisfied as of June 30, 2020 is set forth in the table below:

	2020		2021		2022		Thereafter		Total
	(in millions)
Subscription services	$	40.5	$	56.0	$	26.0	$	11.0	$	133.5
Other business services		2.0		3.0		1.3		0.4		6.7
Total expected revenue	$	42.5	$	59.0	$	27.3	$	11.4	$	140.2

Provision for Doubtful Accounts

The provision for doubtful accounts and the allowance for doubtful accounts are based on the aging of the individual receivables, historical trends and current and anticipated future economic conditions. The Company manages credit risk by disconnecting services to customers who are delinquent, generally after sixty days of delinquency. The Company previously suspended certain collection activities as a result of participation in the Federal Communications Commission (“FCC”) Keep Americans Connected Pledge effective March 12, 2020. The initial two month agreement was extended until June 30, 2020.  As a result of the agreement, the Company waived late fees and arranged payment plans for those customers impacted by COVID-19. Individual receivables are written-off after all reasonable efforts to collect the funds have been made. Actual write-offs may differ from the amounts reserved.

The following table presents the change in the allowance for doubtful accounts for trade accounts receivable:

	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
	(in millions)
Balance at beginning of period	$	9.0	$	7.0	$	7.5	$	7.5
Provision charged to expense		3.8		3.8		9.1		7.3
Accounts written off, net of recoveries		(5.0)		(2.6)		(8.8)		(6.6)
Balance at end of period	$	7.8	$	8.2	$	7.8	$	8.2

The Company established an allowance for doubtful accounts for non-trade accounts receivable of $3.1 million as of June 30, 2020 that is presented within accounts receivable—other in the Company’s unaudited condensed consolidated balance sheet.