KINGSWAY Corp Revenue Disclosure
NOTE 13 REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue from contracts with customers relates to the Extended Warranty and Kingsway Search Xcelerator segments. The following table disaggregates revenues from contracts with customers by revenue type for the years ended December 31, 2025 and December 31, 2024:
| (in thousands) | Years ended December 31, | ||||||||
| 2025 | 2024 | ||||||||
| Vehicle service agreement fees | IWS, Geminus and PWI | $ | 61,402 | $ | 60,513 | ||||
| Maintenance support service fees | Trinity | 4,343 | 3,809 | ||||||
| Warranty product commissions | Trinity | 5,050 | 4,548 | ||||||
| Business services consulting fees | Ravix, CSuite and Image Solutions | 22,623 | 19,761 | ||||||
| Healthcare services fees | SNS and DDI | 17,940 | 17,269 | ||||||
| Software license and support fees | SPI | 3,750 | 3,482 | ||||||
| Motor sales and repair service fees | Roundhouse | 9,660 | — | ||||||
| Skilled trades repair and service fees | Bud's Plumbing, Advanced Plumbing and Southside Plumbing | 10,228 | — | ||||||
| Service fee and other revenue | $ | 134,996 | $ | 109,382 | |||||
Service fee receivables
Receivables from contracts with customers are reported as service fee receivable, net in the consolidated balance sheets and at December 31, 2025 and December 31, 2024 were $13.8 million and $9.4 million, respectively. The increase in receivables from contracts with customers is primarily due to receivables related to Roundhouse, Advanced Plumbing and Southside Plumbing, which were acquired during the third quarter of 2025, as well as due to the timing difference between the Company's satisfaction of performance obligations and customer payments. At December 31, 2023, service fee receivable, net was $10.1 million. The decrease in receivables from contracts with customers from December 31, 2023 to December 31, 2024 is primarily due to the timing difference between the Company's satisfaction of performance obligations and customer payments; partially offset by an increase related to Image Solutions receivables which were acquired on September 26, 2024.
Service fee receivable is reported net of an estimated allowance for credit losses at December 31, 2025 and December 31, 2024 of $1.1 million and $0.6 million, respectively. During the years ended December 31, 2025 and December 31, 2024, the Company recorded an increase to its allowance for credit losses of $0.6 million and $0.6 million, respectively. Service fee receivables that are deemed to be uncollectible are written off against the allowance for credit losses when identified. The Company recorded write-offs of service fee receivables that were deemed to be uncollectible of $0.1 million and $0.2 million during the years ended December 31, 2025 and December 31, 2024, respectively.
Contract asset
The Company records a contract asset, which is included in other assets in the consolidated balance sheets, when revenue is recognized prior to billing the customer. Upon billing, which typically occurs over a three to five year installment period, the value of the contract asset is reversed and service fee receivable is recorded. Changes in contract asset for the years ended December 31, 2025 and December 31, 2024 were as follows:
| (in thousands) | Years ended December 31, | |||
| Balance, December 31, 2023 | $ | 1,688 | ||
| Contract asset additions | 1,093 | |||
| Amounts transferred to service fee receivables | (521 | ) | ||
| Write-off of contract asset balances | (40 | ) | ||
| Measurement period adjustment related to SPI | (342 | ) | ||
| Balance, December 31, 2024 | 1,878 | |||
| Contract asset additions | 1,086 | |||
| Amounts transferred to service fee receivables | (897 | ) | ||
| Write-off of contract asset balances | (10 | ) | ||
| Balance, December 31, 2025 | $ | 2,057 | ||
The contract asset is reported net of an estimated allowance for credit losses of at December 31, 2025 and December 31, 2024. Contract assets that are deemed to be uncollectible are written off against the allowance for credit losses when identified. During the second quarter of 2024, the Company recorded a measurement period adjustment related to acquisition of SPI on September 7, 2023 that decreased the estimated value of the contract asset by $0.3 million.
Deferred service fees
The Company records deferred service fees resulting from contracts with customers when payment is received in advance of satisfying the performance obligations. Changes in deferred service fees for the years ended December 31, 2025 and December 31, 2024 were as follows:
| (in thousands) | Years ended December 31, | |||
| Balance, December 31, 2023 | $ | 83,995 | ||
| Deferral of revenue | 63,506 | |||
| Recognition of deferred service fees | (64,393 | ) | ||
| Balance, December 31, 2024 | 83,108 | |||
| Deferral of revenue | 63,616 | |||
| Recognition of deferred service fees | (59,570 | ) | ||
| Balance, December 31, 2025 | $ | 87,154 | ||
The increase in deferred service fees during the year ended December 31, 2025 is primarily due to additions to deferred service fees in excess of deferred service fees recognized during the year ended December 31, 2025. The decrease in deferred service fees during the year ended December 31, 2024 is primarily due to deferred service fees recognized in excess of additions to deferred service fees during the year ended December 31, 2024.
Approximately $43.4 million and $44.3 million of service fee and other revenue recognized during the years ended December 31, 2025 and December 31, 2024 was included in deferred service fees as of December 31, 2024 and December 31, 2023, respectively.
Remaining performance obligations
The Company expects to recognize within year as service fee and other revenue approximately 53.6% of the outstanding performance obligations of December 31, 2025. The balance relates primarily to vehicle service agreement fees.
Deferred contract costs
Deferred contract costs represent the deferral of incremental costs to obtain or fulfill a contract with a customer. The deferred contract costs balances and related amortization expense for the years ended December 31, 2025 and December 31, 2024 are comprised as follows:
| (in thousands) | Years ended December 31, 2025 | Years ended December 31, 2024 | ||||||||||||||||||||||
| Costs to Obtain a Contract | Costs to Fulfill a Contract | Total | Costs to Obtain a Contract | Costs to Fulfill a Contract | Total | |||||||||||||||||||
| Balance at January 1, net | $ | 13,808 | $ | 81 | $ | 13,889 | $ | 13,653 | $ | 81 | $ | 13,734 | ||||||||||||
| Additions | 11,324 | 26 | 11,350 | 9,595 | 24 | 9,619 | ||||||||||||||||||
| Amortization | (10,313 | ) | (19 | ) | (10,332 | ) | (9,440 | ) | (24 | ) | (9,464 | ) | ||||||||||||
| Balance at December 31, net | $ | 14,819 | $ | 88 | $ | 14,907 | $ | 13,808 | $ | 81 | $ | 13,889 | ||||||||||||
No impairment losses related to deferred contract costs were recorded in 2025 or 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 5, 2024 | |
| 2022 | Mar 8, 2023 | |
| 2021 | Feb 28, 2022 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.