Revenue

Adoption of Revenue from Contracts with Customers

On December 31, 2017, the Company adopted the updated guidance on revenue from contracts with customers using the modified retrospective method applied to those contracts which were not completed as of December 31, 2017. Results for reporting periods beginning after December 31, 2017 are presented under the updated guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical revenue accounting.

The Company recorded a net increase to opening retained earnings of $2,145 as of December 31, 2017 due to the cumulative impact of adopting the updated guidance, inclusive of a $3,501 decrease to deferred revenue, a decrease of $568 to prepaid expenses and other current assets and an increase to the deferred income tax liability of $788.

Revenue Recognition

Revenues are recognized when control of the promised services or goods is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services or goods.

WW earns revenue from subscriptions for the Company’s digital products and by conducting workshops, for which it charges a fee, predominantly through commitment plans, prepayment plans or the “pay-as-you-go” arrangement. WW also earns revenue by selling consumer products (including publications) in its workshops, online and to its franchisees, collecting commissions from franchisees, collecting royalties related to licensing agreements, selling magazine subscriptions, publishing, selling advertising space on its websites and in copies of its publications and By Mail product sales.

Commitment plans, prepaid workshop fees and magazine subscription revenue is recorded to deferred revenue and amortized into revenue as control is transferred over the period earned since these performance obligations are satisfied over time. Digital subscription revenues, consisting of the fees associated with subscriptions for the Company’s Digital subscription products, including its Personal Coaching product, are deferred and recognized on a straight-line basis as control is transferred over the subscription period. One-time Digital sign-up fees are considered immaterial in the context of the contract and the related revenue is recorded to deferred revenue and amortized into revenue over the commitment period. In the Digital + Studio business, WW generally charges non-refundable registration and starter fees in exchange for access to the Company’s digital subscription products, an introductory information session and materials it provides to new members. Revenue from these registration and starter fees is considered immaterial in the context of the contract and are recorded to deferred revenue and amortized into revenue over the commitment period. Revenue from “pay-as-you-go” workshop fees, consumer product sales, By Mail, commissions and royalties is recognized at the point in time control is transferred, when services are rendered, products are shipped to customers and title and risk of loss passes to the customers, and commissions and royalties are earned, respectively. Revenue from advertising in magazines is recognized when advertisements are published. Revenue from magazine sales is recognized when the magazine is sent to the customer. For revenue transactions that involve multiple performance obligations, the amount of revenue recognized is determined using the relative fair value approach, which is generally based on each performance obligation’s stand-alone selling price. Discounts to customers, including free registration offers, are recorded as a deduction from gross revenue in the period such revenue was recognized. Revenue from advertising on its websites is recognized when the advertisement is viewed by the user.

The Company grants refunds in aggregate amounts that historically have not been material. Because the period of payment of the refund generally approximates the period revenue was originally recognized, refunds are recorded as a reduction of revenue over the same period.

The following table presents the Company’s revenues disaggregated by revenue source:

	Three Months Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
	2018		2017		2018		2017
Digital Subscription Revenues	$	143,299	$	107,587	$	432,863	$	312,710
Digital + Studio Fees		168,664		165,632		551,499		504,986
Service revenues, net	$	311,963	$	273,219	$	984,362	$	817,696
Product sales and other, net		53,802		50,468		199,373		176,726
Revenues, net	$	365,765	$	323,687	$	1,183,735	$	994,422

The following tables present the Company’s revenues disaggregated by segment:

	Three Months Ended September 29, 2018
	North		Continental		United
	America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	95,664	$	37,928	$	6,282	$	3,425	$	143,299
Digital + Studio Fees		125,282		25,441		12,619		5,322		168,664
Service revenues, net	$	220,946	$	63,369	$	18,901	$	8,747	$	311,963
Product sales and other, net		34,335		9,025		6,455		3,987		53,802
Revenues, net	$	255,281	$	72,394	$	25,356	$	12,734	$	365,765

	Three Months Ended September 30, 2017
	North		Continental		United
	America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	71,294	$	27,746	$	5,687	$	2,860	$	107,587
Digital + Studio Fees		122,441		23,412		13,306		6,473		165,632
Service revenues, net	$	193,735	$	51,158	$	18,993	$	9,333	$	273,219
Product sales and other, net		29,942		9,507		6,480		4,539		50,468
Revenues, net	$	223,677	$	60,665	$	25,473	$	13,872	$	323,687

	Nine Months Ended September 29, 2018
	North		Continental		United
	America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	289,002	$	113,431	$	19,800	$	10,630	$	432,863
Digital + Studio Fees		408,200		83,923		41,552		17,824		551,499
Service revenues, net	$	697,202	$	197,354	$	61,352	$	28,454	$	984,362
Product sales and other, net		121,805		39,164		23,498		14,906		199,373
Revenues, net	$	819,007	$	236,518	$	84,850	$	43,360	$	1,183,735

	Nine Months Ended September 30, 2017
	North		Continental		United
	America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	212,976	$	74,989	$	15,887	$	8,858	$	312,710
Digital + Studio Fees		376,106		70,176		39,448		19,256		504,986
Service revenues, net	$	589,082	$	145,165	$	55,335	$	28,114	$	817,696
Product sales and other, net		106,315		34,415		20,572		15,424		176,726
Revenues, net	$	695,397	$	179,580	$	75,907	$	43,538	$	994,422

Information about Contract Balances

For Service Revenues, the Company typically collects payment in advance of providing services. Any amounts collected in advance of services being provided are recorded in deferred revenue. In the case where amounts are not collected, but the service has been provided and the revenue has been recognized, the amounts are recorded in accounts receivable. The opening and ending balances of the Company’s deferred revenues are as follows:

	Deferred		Deferred
	Revenue		Revenue-Long Term
Balance as of December 30, 2017	$	74,332	$	2,049
Net increase (decrease) during the period		(15,965)		(815)
Balance as of September 29, 2018	$	58,367	$	1,234

Revenue recognized from amounts included in current deferred revenue as of December 30, 2017 was $71,930 for the nine months ended September 29, 2018. The Company’s long-term deferred revenue, which is included in other liabilities on the Company’s consolidated balance sheet, had a balance of $1,234 at September 29, 2018 related to upfront payments received as an inducement for entering into certain sales-based royalty agreements with third party licensees. This revenue is amortized on a straight-line basis over the term of the agreements.

Practical Expedients and Exemptions

The Company elected to apply the updated guidance only to contracts that were not completed as of December 31, 2017, the date of adoption. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company expenses sales commissions when incurred (amortization period would have been one year or less) and these expenses are recorded within selling, general and administrative expenses. The Company treats shipping and handling fees as fulfillment costs and not as a separate performance obligation, and as a result, any fees received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of product sales and other for amounts paid to applicable carriers. Sales tax, value-added tax, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.