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Revenue Information
9 Months Ended
Sep. 30, 2018
Revenue from Contract with Customer [Abstract]  
Revenue Information and Deferred Sales Commissions
Revenue Information and Deferred Sales Commissions
Adoption of the New Revenue Standard
On January 1, 2018, the Company adopted the new revenue standard using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting.
As a result of adopting the new revenue standard, the Company now recognizes transaction revenue earlier for certain of its Auto Buying Program and OEM incentives arrangements based on estimated variable consideration to be received upon the occurrence of subsequent vehicle sales between the Auto Buying Program user and the Dealer. Upon adoption, the Company recorded a contract asset within other current assets to reflect revenues that would be recognized earlier under the new revenue standard, which is upon delivery of introductions, as well as a corresponding balance of revenue share paid to affinity marketing partners within accounts payable.
Also as a result of adoption, the Company identified an impact related to the recognition of costs to obtain customer contracts. Prior to adoption, sales commissions were expensed as incurred. Under the new revenue standard, certain sales commissions are deferred and recognized over a period of time. The Company recorded an adjustment within the consolidated balance sheet to capitalize these sales commissions as of January 1, 2018 within other assets to reflect the deferred costs that had been expensed under the prior accounting policy for sales commissions.
The cumulative effects of the changes made to the Company’s January 1, 2018 consolidated balance sheet were as follows (in thousands):
 
December 31, 2017
 
Adjustments Due to Adoption of New Revenue Standard
 
January 1, 2018
 
 
 
 
 
 
Assets
 
 
 
 
 
Other current assets
$
1,145

 
$
3,324

 
$
4,469

Other assets
1,391

 
2,962

 
4,353

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Accounts payable
$
18,620

 
$
256

 
$
18,876

Accrued expenses and other liabilities
12,790

 
107

 
12,897

 
 
 
 
 
 
Stockholders Equity
 
 
 
 
 
Accumulated deficit
$
(351,084
)
 
$
5,923

 
$
(345,161
)
The impact of adoption of the new revenue standard on the Company’s consolidated statement of comprehensive loss and consolidated balance sheet was as follows (in thousands):
 
Three Months Ended September 30, 2018
 
As Reported
 
Balances Without Adoption of New Revenue Standard
 
Effect of Change
Increase/(Decrease)
 
 
 
 
 
 
Revenues
$
93,586

 
$
93,638

 
$
(52
)
Sales and marketing
57,031

 
56,990

 
41

Net loss
(6,251
)
 
(6,158
)
 
93

 
Nine Months Ended September 30, 2018
 
As Reported
 
Balances Without Adoption of New Revenue Standard
 
Effect of Change
Increase/(Decrease)
 
 
 
 
 
 
Revenues
$
262,497

 
$
261,808

 
$
689

Sales and marketing
157,463

 
157,372

 
91

Net loss
(21,928
)
 
(22,526
)
 
(598
)


 
September 30, 2018
 
As Reported
 
Balances Without Adoption of New Revenue Standard
 
Effect of Change
Increase/(Decrease)
 
 
 
 
 
 
Assets
 
 
 
 
 
Other current assets
$
5,806

 
$
1,670

 
$
4,136

Other assets
5,113

 
1,946

 
3,167

 
 
 
 
 


Liabilities
 
 
 
 
 
Accounts payable
$
26,933

 
$
26,381

 
$
552

Accrued expenses and other liabilities
17,561

 
17,331

 
230

 
 
 
 
 
 
Stockholders Equity
 
 
 
 
 
Accumulated deficit
$
(367,089
)
 
$
(373,610
)
 
$
6,521


Deferred Sales Commissions
Deferred sales commissions within other assets were $3.2 million as of September 30, 2018. For the three and nine months ended September 30, 2018, under the new revenue standard, amortization expense for deferred sales commissions was $0.5 million and $1.2 million, respectively, and there was no impairment loss in relation to the costs capitalized in either period. Sales commission expenses under the old standard would have resulted in expenses of $0.5 million and $1.5 million for the three and nine months ended September 30, 2018, respectively.
Contract Balances
The Company’s contract asset balance for estimated variable consideration to be received upon the occurrence of subsequent vehicle sales is included within other current assets and is distinguished from accounts receivable in that these amounts are conditional upon subsequent sales and not only upon the passage of time. Substantially all of the contract asset balances of $3.3 million at January 1, 2018 were transferred to accounts receivable during the nine months ended September 30, 2018 as vehicle sales occurred, with no significant changes in the estimate. A contract asset of $4.1 million was recorded as of September 30, 2018 for leads delivered where consideration to be received was still conditional upon subsequent vehicle sales.
Disaggregation of Revenue
The Company disaggregates revenue into three revenue streams: Auto Buying Program revenue, OEM incentives revenue, and forecasts, consulting and other revenue. Prior to adoption of the new revenue standard, Auto Buying Program revenue and OEM incentives revenue had been disclosed together as “transaction revenue.” The following table presents the Company’s revenue categories during the periods presented (in thousands):
 
Three Months Ended 
 September 30,
Nine Months Ended September 30,
 
2018
 
2017(1)
2018
 
2017(1)
 
 
 
 
 
 
 
Auto Buying Program revenue
$
79,250

 
$
73,402

$
226,858

 
$
207,922

OEM incentives revenue
9,456

 
4,124

21,804

 
17,239

Forecasts, consulting and other revenue
4,880

 
4,914

13,835

 
14,855

Total revenues
$
93,586

 
$
82,440

$
262,497

 
$
240,016


 
(1)
Prior period amounts have not been adjusted under the modified retrospective method.