Vantiv / Smarter / Faster / Easier / Payments    Print Page  |  Close Window

SEC Filings

10-Q
WORLDPAY, INC. filed this Form 10-Q on 05/03/2019
Entire Document
 
Worldpay, Inc.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)

As a result of adopting ASC 606, the Company records certain fees paid to third parties, including network fees and other costs, as a reduction of revenue. The adoption of ASC 606 did not have a material impact on any other line items of the Company’s Consolidated Statements of Income, Statements of Comprehensive (Loss) Income, Statements of Financial Position, Statements of Equity and Statements of Cash Flows.

Disaggregation of Revenue

In the following table, revenue is disaggregated by source of revenue (in millions):

 
 
Three Months Ended March 31, 2019
 
 
Technology Solutions
 
Merchant Solutions
 
Issuer Solutions
 
Total
Major Products and Services (1)
 
 
 
 
 
 
 
 
Processing services
 
$
284.0

 
$
361.3

 
$
46.2

 
$
691.5

Products and services
 
143.3

 
98.1

 
37.1

 
278.5

Total
 
$
427.3

 
$
459.4

 
$
83.3

 
$
970.0


 
 
Three Months Ended March 31, 2018
 
 
Technology Solutions
 
Merchant Solutions
 
Issuer Solutions
 
Total
Major Products and Services (1)
 
 
 
 
 
 
 
 
Processing services
 
$
230.1

 
$
340.0

 
$
46.8

 
$
616.9

Products and services
 
106.3

 
92.2

 
35.3

 
233.8

Total
 
$
336.4

 
$
432.2

 
$
82.1

 
$
850.7


(1) 
Revenue breakdown is based on management’s view and certain products and services revenue may be based on the number or volume of transactions.

Processing Services

Processing services revenue is primarily derived from processing credit and debit card transactions comprised of fees charged to businesses for payment processing services. The fees charged consist of a percentage of the transaction value, a specified fee per transaction, a fixed fee, or a combination.

Products and Services

Products and services revenue is primarily derived from ancillary services such as treasury management and foreign exchange, regulatory compliance, chargebacks and fraud services for which the fees charged may or may not be related to the volume or number of transactions.

Costs to Obtain and Fulfill a Contract

ASC 606 requires capitalizing costs of obtaining a contract when those costs are incremental and expected to be recovered. Since incremental commission fees paid to sales teams as a result of obtaining contracts are recoverable, the Company recorded a $28.8 million ($22.3 million net of deferred taxes) cumulative catch-up capitalized asset on January 1, 2018. As of March 31, 2019 and December 31, 2018, the amount capitalized as contract costs is $42.4 million and $39.3 million, respectively, which is included in other non-current assets.

In order to determine the amortization period for sales commission contract costs, the Company applied the portfolio approach for “like-kind contracts” to which sales compensation earnings can be applied and allocated incentive payments to each portfolio accordingly. The Company evaluated each individual portfolio to determine the proper length of time over which the capitalized incentive should be amortized by analyzing customer attrition rates using historical data and other metrics.


17