v3.25.2
Contract Assets and Excess Profit Share Receipts
 6 Months Ended
Jun. 30, 2025
Revenue from Contract with Customer [Abstract]  
Contract Assets and Excess Profit Share Receipts Contract Assets and Excess Profit Share Receipts
Contract Assets
We recognize contract assets when we transfer services to a customer, recognize revenue for amounts not yet billed, and the right to consideration is conditional on something other than the passage of time. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. Changes in our contract assets primarily result from the timing difference between the satisfaction of our performance obligation and receipt of the customer’s payment.
For performance obligations related to profit share revenue that were satisfied in previous periods, we evaluate and update our profit share revenue forecast on a quarterly basis and adjust the contract assets accordingly. An increase in the profit share revenue forecast associated with performance obligations satisfied in previous periods, or historic vintages, is reported as a positive change in estimate and generates an increase in our contract asset, additional revenues and future expected cash flows. A decrease in the profit share revenue forecast associated with historic vintages is reported as a negative change in estimate and generates a decrease in our contract asset, and a reduction in revenues and future expected cash flows. To the extent a negative change in estimate exceeds the associated contract asset balance at a loan level, or if cash consideration received is in excess of the expected profit share consideration, the amount is recorded as an excess profit share receipt liability.
As the expected profit share variable consideration and related contract assets are recorded and updated on a quarterly basis, the amounts disclosed as “Changes in estimates of revenue from performance obligations satisfied in previous periods” in the table below includes adjustments to revenue recorded in the previous quarters of the same fiscal year reported.
Contract assets balances for the periods indicated below were as follows:
 Contract Assets
Profit
Share		Program
Fees		Claims Administration and Other Service FeesTotal
(in thousands)
Ending balance as of December 31, 2024$9,633 $3,229 $2,205 $15,067 
Increase of contract assets due to new business generation15,347 30,146 4,873 50,366 
Change in estimates of revenue from performance obligations satisfied in previous periods
(296)— — (296)
Payables (receivables) transferred from contract assets25 (30,335)— (30,310)
Payments received from insurance carriers
(2,419)— (5,364)(7,783)
Profit share realization of losses reducing payments received (1)
(5,828)— — (5,828)
Transfer from excess profit share receipts liability8,296 — — 8,296 
Provision for expected credit losses(64)— — (64)
Ending balance as of June 30, 2025$24,694 $3,040 $1,714 $29,448 
(1) Represents the deemed gross payment that would have been received for historic vintages in a contract asset position if not reduced by the realization of accrued losses on historic vintages in an excess profit share receipts liability position. The $5.8 million of realization of losses reduced the contract assets as payment will not be received and reduced the excess profit share receipts liability as discussed below.
Excess Profit Share Receipts Liability
When profit share cash consideration received is in excess of the expected profit share consideration at the loan level, the amount of excess funds and the forecasted losses are recorded as an excess profit share receipts liability. The excess profit share receipts liability is based on the current forecast of future losses of the active loan portfolio and will be impacted by future changes in estimate related to profit share revenue. There is generally no contractual obligation to return the excess funds while an insurance partner is actively participating in our profit share program; however, future expected profit share cash flows may be reduced. When cash payments received from our insurance partners related to our profit share contract assets are reduced due to the realization of accrued losses, the excess profit share receipts liability and contract asset are both reduced.
The excess profit share receipts liability balance for the periods indicated below were as follows:
Profit
Share
(in thousands)
Ending balance as of December 31, 2024$47,556 
Change in estimates of revenue from performance obligations satisfied in previous periods352 
Realization of losses reducing payments received, net of payments received from insurance carriers (1)
(5,828)
Transfer from contract asset8,296 
Ending balance as of June 30, 2025$50,376 
(1) Represents the realization of losses on historic vintages which reduced the profit share payment received from insurance carriers. Amount is shown net of any payments received from insurance carriers related to historic vintages in an excess profit share liability position.
Contract Costs
The fulfillment costs associated with the Company’s contracts with customers do not meet the criteria for capitalization and therefore are expensed as incurred.