REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Prospective Adoption of New Accounting Pronouncements

recorded a net reduction to our opening accumulated deficit of $88.9 million, which is net of a $6.7 million income tax effect, as of January 1, 2018 due to the cumulative impact of adopting Topic 606. The following table summarizes balance sheet accounts impacted by the cumulative effect of adopting Topic 606 (in thousands):



Account	Increase (decrease) to beginning accumulated deficit
Prepaid expenses and other current assets	$	(4,007	)
Other non-current assets	(10,223		)
Accrued merchant and supplier payables	(64,970		)
Accrued expenses and other current liabilities	(13,188		)
Other non-current liabilities	3,443
Effect on beginning accumulated deficit	$	(88,945	)

See Note 2, Adoption of New Accounting Standards, for additional information about our revenue recognition policies before and after the adoption of Topic 606.

Impacts on Condensed Consolidated Financial Statements

The following tables summarize the impacts of adopting Topic 606 on our condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018 (in thousands):

Condensed Consolidated Balance Sheet



	September 30, 2018
	As reported		Effects of Topic 606			Balances without adoption of Topic 606
Total assets	$	1,403,920	$	(10,836	)	$	1,393,084
Total liabilities	1,072,280		93,799			1,166,079
Total equity	331,640		(104,635		)	227,005

Condensed Consolidated Statements of Operations



	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018
	As reported			Effects of Topic 606			Balances without adoption of Topic 606			As reported			Effects of Topic 606			Balances without adoption of Topic 606
Revenue:
Service revenue ⁽¹⁾⁽²⁾	$	289,214		$	1,568		$	290,782		$	886,663		$	5,790		$	892,453
Product revenue	303,669			—			303,669			950,156			—			950,156
Total revenue	592,883			1,568			594,451			1,836,819			5,790			1,842,609
Cost of revenue:
Service cost of revenue ⁽³⁾	29,792			8,609			38,401			91,167			21,927			113,094
Product cost of revenue	257,102			—			257,102			791,120			—			791,120
Cost of revenue ⁽³⁾	286,894			8,609			295,503			882,287			21,927			904,214
Gross profit	305,989			(7,041		)	298,948			954,532			(16,137		)	938,395
Operating expenses:
Marketing ⁽⁴⁾	92,717			1,799			94,516			286,051			5,506			291,557
Selling, general and administrative ⁽⁵⁾	160,214			(763		)	159,451			676,399			(3,254		)	673,145
Restructuring charges	35			—			35			(81		)	—			(81		)
Total operating expenses	252,966			1,036			254,002			962,369			2,252			964,621
Income (loss) from operations	53,023			(8,077		)	44,946			(7,837		)	(18,389		)	(26,226		)
Other income (expense), net	(4,860		)	—			(4,860		)	(39,832		)	—			(39,832		)
Income (loss) before provision (benefit) for income taxes	48,163			(8,077		)	40,086			(47,669		)	(18,389		)	(66,058		)
Provision (benefit) for income taxes ⁽⁶⁾	988			(643		)	345			205			(776		)	(571		)
Net income (loss)	$	47,175		$	(7,434	)	$	39,741		$	(47,874	)	$	(17,613	)	$	(65,487	)

(1)

For the three months ended September 30, 2018, the adoption of Topic 606 resulted in a $10.4 million decrease to Revenue for refunds on service revenue transactions for which the merchant's share is not recoverable and customer credits issued for relationship purposes and a decrease of $1.2 million related to the timing of recognition of revenue from hotel reservation offerings, partially offset by increases of $9.3 million related to the timing of recognition of variable consideration from unredeemed vouchers and $0.7 million related to the timing of recognition of breakage revenue from customer credits that are not expected to be used.

(2)

For the nine months ended September 30, 2018, the adoption of Topic 606 resulted in a $27.4 million decrease to Revenue for refunds on service revenue transactions for which the merchant's share is not recoverable and customer credits issued for relationship purposes, partially offset by increases of $17.7 million related to the timing of recognition of variable consideration from unredeemed vouchers, $1.6 million related to the timing of recognition of revenue from hotel reservation offerings and $2.3 million related to the timing of recognition of breakage revenue from customer credits that are not expected to be used.


(3)	Reflects decreases to Cost of revenue following the adoption of Topic 606 for refunds on service revenue transactions for which the merchant's share is not recoverable.


(4)	Reflects decreases to Marketing expense following the adoption of Topic 606 for customer credits issued for relationship purposes.


(5)	Reflects increases to Selling, general and Administrative expense for the amortization of deferred contract acquisition costs in excess of amounts capitalized.


(6)	As discussed in Note 13, Income Taxes, for the nine months ended September 30, 2018, we recognized an income tax benefit of $6.4 million resulting from the impact of adopting Topic 606 on intercompany activity in certain foreign jurisdictions. That income tax benefit is not reflected in this table, which presents the direct impacts of adopting Topic 606.

Disaggregation of Revenue



	Three Months Ended September 30, 2018							Nine Months Ended September 30, 2018
	As reported		Effects of Topic 606			Balances without adoption of Topic 606		As reported		Effects of Topic 606			Balances without adoption of Topic 606
North America
Service revenue:
Local	$	180,059	$	128		$	180,187	$	553,340	$	4,654		$	557,994
Goods	4,021		(2		)	4,019		12,691		93			12,784
Travel	17,217		1,881			19,098		57,189		(520		)	56,669
Product revenue - Goods	159,854		—			159,854		511,451		—			511,451
Total North America revenue	361,151		2,007			363,158		1,134,671		4,227			1,138,898

International
Service revenue:
Local	75,946		(772		)	75,174		221,949		1,728			223,677
Goods	2,584		836			3,420		10,965		40			11,005
Travel	9,387		(503		)	8,884		30,529		(205		)	30,324
Product revenue - Goods	143,815		—			143,815		438,705		—			438,705
Total International revenue	231,732		(439		)	231,293		702,148		1,563			703,711

Consolidated
Service revenue:
Local	256,005		(644		)	255,361		775,289		6,382			781,671
Goods	6,605		834			7,439		23,656		133			23,789
Travel	26,604		1,378			27,982		87,718		(725		)	86,993
Product revenue - Goods	303,669		—			303,669		950,156		—			950,156
Total Consolidated Revenue	$	592,883	$	1,568		$	594,451	$	1,836,819	$	5,790		$	1,842,609

Deferred Revenue, by Arrangement, Disclosure

The following table summarizes the activity in the liability for customer credits for the nine months ended September 30, 2018 (in thousands):



	Customer Credits
Balance as of January 1, 2018	$	19,414
Credits issued	97,586
Credits redeemed ⁽¹⁾	(83,818		)
Breakage revenue recognized	(15,639		)
Foreign currency translation	(123		)
Balance as of September 30, 2018	$	17,420

(1)

Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant or for merchandise inventory sold by us. When customer credits are redeemed for goods or services provided by a third-party merchant, service revenue is recognized on a net basis as the difference between the carrying amount of the customer credit liability derecognized and the amount due to the merchant for the related transaction. When customer credits are redeemed for merchandise inventory sold by us, product revenue is recognized on a gross basis equal to the amount of the customer credit liability derecognized. Customer credits are primarily used within one year of issuance.