Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

3. Revenue from Contracts with Customers

The following table summarizes revenue by region based on the billing country of users (in thousands, except percentages):

	Three Months Ended March 31,
	2024				2023
	Amount		Percentage of Revenue		Amount		Percentage of Revenue
United States and Canada (1)	$	509,564	64	%	$	425,763	65	%
Europe	145,564		18		118,530		18
Asia-Pacific, including Australia and New Zealand	85,274		11		65,128		10
Rest of world	60,898		7		45,923		7
Total	$	801,300	100	%	$	655,344	100	%

The Company’s revenues in the United States were 60% and 61% of consolidated revenue for the three months ended March 31, 2024 and 2023, respectively.

No individual country, other than the United States, exceeded 10% of the Company’s consolidated revenue for any period presented.

Durable virtual items accounted for 92% and 90% of virtual item-related revenue in the three months ended March 31, 2024 and 2023, respectively. Consumable virtual items accounted for 8% and 10% of virtual item-related revenue in the three months ended March 31, 2024 and 2023, respectively.

The estimated average lifetime of a paying user was 28 months during the three months ended March 31, 2024 and 2023. Following the Company’s assessment of the estimated average lifetime of a paying user completed at the onset of each quarter, beginning April 1, 2024, the estimated average lifetime of a paying user changed from 28 months to 27 months. Based on the carrying amount of deferred revenue and deferred cost of revenue as of March 31, 2024, the April 1, 2024 change in estimate will result in an increase in revenue and cost of revenue of $58.9 million and $12.4 million, respectively, during the three months ended June 30, 2024 and an increase in revenue and cost of revenue of $98.0 million and $20.4 million, respectively, during the twelve months ended December 31, 2024.

Refer to the heading “Basis of Presentation and Summary of Significant Accounting Policies — Revenue Recognition” as described in the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 21, 2024 for further background on the Company’s process to estimate the average lifetime of a paying user.

Deferred Revenue

The Company receives payments from its users based on the payment terms established in its contracts. Such payments are initially recorded to deferred revenue and are recognized into revenue as the Company satisfies its performance obligations. The aggregate amount of revenue allocated to unsatisfied performance obligations is included in our deferred revenue balances.

The increase in deferred revenue for the three months ended March 31, 2024 was driven by sales during the period exceeding revenue recognized from the satisfaction of our performance obligations, which includes the revenue recognized during the period that was included in the current portion of deferred revenue at the beginning of the period. During the three months ended March 31, 2024, we recognized $704.4 million of revenue that was included in the current deferred revenue balance as of December 31, 2023.