REVENUE FROM CONTRACTS WITH CUSTOMERS
The Company generated 79% of its revenue from U.S. domestic sales in each of 2025, 2024 and 2023. The remaining 21% of revenue was generated from non-U.S. sales.
In 2025, 2024 and 2023, the Company recognized 53%, 54% and 54%, respectively, of its revenue over time as control of the services and goods transferred to the customer. The remaining 47%, 46% and 46%, respectively, of revenue was recognized at a point in time, when the customer obtained control of the promised goods.
The determination of the method by which the Company measures its progress towards the satisfaction of its performance obligations requires judgment and is described in the Summary of Significant Accounting Policies (see Note 2).
Contract Assets. As of December 31, 2025, the Company recognized a total contract asset of $36.5 million related to a contract at a Kaplan International business, of which $4.4 million is included in Other current assets and $32.1 million is included in Deferred Charges and Other Assets. The Company expects to recognize an additional $235.8 million related to the remaining performance obligation in the contract over the next four years. As of December 31, 2024, the contract asset was $36.6 million, of which $1.9 million was included in Other current assets and $34.7 million was included in Deferred Charges and Other Assets. Additional contract assets of $3.0 million and
$3.1 million are included in Other current assets on the Company’s Consolidated Balance Sheet as of December 31, 2025 and 2024, respectively.
Deferred Revenue. The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance which includes some payments that are refundable due to the contractual right of the customer to cancel the agreement. As of December 31, 2025 and 2024, 22% and 19%, respectively, of the Company’s deferred revenue consisted of prepaid amounts which are refundable. The following table presents the change in the Company’s deferred revenue balance during the year ended December 31, 2025:
| | | | | | | | | | | | | | |
| As of December 31 | |
| (in thousands) | 2025 | | 2024 | % Change |
| Deferred revenue | $ | 418,090 | | | $ | 397,435 | | 5 |
The majority of the change in the deferred revenue balance is related to increases within the KI and Supplemental Education divisions due to the cyclical nature of services. During the year ended December 31, 2025, the Company recognized $351.1 million from the Company’s deferred revenue balance as of December 31, 2024, including $60.9 million of prepaid amounts which were refundable at the prior year-end.
Revenue allocated to remaining performance obligations represents deferred revenue amounts that will be recognized as revenue in future periods. As of December 31, 2025, the deferred revenue balance related to certain medical and nursing qualifications with an original contract length greater than 12 months at Kaplan Supplemental Education was $5.0 million. Kaplan Supplemental Education expects to recognize 68% of this revenue over the next 12 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 Year | | Costs Associated with New Contracts | | Less: Costs Amortized During the Year | | Other | | Balance
at
End of
Year |
| 2025 | $ | 42,121 | | | $ | 95,621 | | | $ | (97,611) | | | 2,273 | | | $ | 42,404 | |
| 2024 | 41,634 | | | 99,588 | | | (101,914) | | | 2,813 | | | 42,121 | |
| 2023 | 31,647 | | | 98,527 | | | (90,839) | | | 2,299 | | | 41,634 | |
| | | | | | | | | |
The majority of other activity was related to currency translation adjustments and other adjustments in 2025, 2024 and 2023.