Credit Risk and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2020

Credit Risk and Allowance for Credit Losses

The Company is exposed to significant concentrations of credit risk for certain of its financial assets, including cash, cash equivalents and accounts receivable.

Cash and Cash Equivalents

Cash is carried on the Company’s consolidated balance sheets at amortized cost and consists primarily of U.S. dollars and euros held in insured depository accounts with major U.S. and international banks and financial institutions. The Company believes its risk of credit losses for cash is remote and, accordingly, its allowance for credit losses was insignificant as of June 30, 2020 and December 31, 2019. As of June 30, 2020 and December 31, 2019, $40.7 million and $19.7 million of cash exceeded depository insurance limits, respectively.

The Company invests certain of its cash in cash equivalents that are high-quality, liquid money market funds maintained by major U.S. and international banks and financial institutions, and it does not have a history of any losses on its cash and/or cash equivalents. The Company’s cash equivalents are measured at fair value on its consolidated balance sheets using Level 1 inputs of the fair value hierarchy.

Accounts Receivable, Net

Accounts receivable are carried on the Company’s consolidated balance sheets at amortized cost, net of an allowance for credit losses. The Company extends credit in the normal course of business to both U.S. and international customers on a non-collateralized basis under payment terms that typically range from 30 to 120 days. Accounts receivable are written-off in the period that management determines they are uncollectible.

The following table sets forth the composition of the Company’s accounts receivable, net as of June 30, 2020 and December 31, 2019:



(in thousands)	June 30, 2020			December 31, 2019
Accounts receivable	$	34,349		$	25,503
Less: Allowance for credit losses	(1,119		)	(269		)
Accounts receivable, net	$	33,230		$	25,234

The Company estimates an allowance for credit losses on its accounts receivable using historical information, current events and reasonable and supportable forecasts of future events. Such information includes, but is not limited to, the Company’s historical collections trends, its customers’ credit histories and other financial information, customer type, customer-specific circumstances, industry, peer and economic data. To estimate the allowance for credit losses, the Company uses an aging method that assigns a provision for expected credit losses to each aging category of accounts receivable, including current accounts, which increases as accounts age and/or extend past their due dates. The Company does not have a significant history of material losses from uncollectible accounts.

The following table sets forth a summary of the changes in the Company’s allowance for credit losses related to accounts receivable for the six months ended June 30, 2020 and 2019:



	Six Months Ended June 30,
(in thousands)	2020			2019
Balance as of January 1	$	428		$	384
Provision for expected credit losses	989			909
(Write-offs) recoveries of accounts receivable	(298		)	70
Balance as of June 30	$	1,119		$	1,363

Concentration of Credit Risk

Three customers, which were advertising aggregators or payment processors representing thousands of customers, comprised 73% and 42% of the Company’s accounts receivable as of June 30, 2020 and December 31, 2019, respectively.