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 June 30, 2018
	As Reported			Balances Without Adoption of New Revenue Standard			Effect of Change Increase/(Decrease)

Revenues	$	87,850		$	87,412		$	438
Sales and marketing	52,014			51,962			52
Net loss	(6,622		)	(7,008		)	(386		)



	Six Months Ended June 30, 2018
	As Reported			Balances Without Adoption of New Revenue Standard			Effect of Change Increase/(Decrease)

Revenues	$	168,911		$	168,170		$	741
Sales and marketing	100,432			100,382			50
Net loss	(15,677		)	(16,368		)	(691		)



	June 30, 2018
	As Reported			Balances Without Adoption of New Revenue Standard			Effect of Change Increase/(Decrease)

Assets
Other current assets	$	4,971		$	897		$	4,074
Other assets	5,188			2,039			3,149

Liabilities
Accounts payable	$	18,445		$	17,952		$	493
Accrued expenses and other liabilities	14,769			14,653			116

Stockholders’ Equity
Accumulated deficit	$	(360,838	)	$	(367,452	)	$	6,614

Deferred Sales Commissions

Deferred sales commissions within other assets were $3.1 million as of June 30, 2018. For the three and six months ended June 30, 2018, under the new revenue standard, amortization expense for deferred sales commissions was $0.4 million and $0.8 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 $0.6 million and $1.0 million for the three and six months ended June 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 six months ended June 30, 2018 as vehicle sales occurred, with no significant changes in the estimate. A contract asset of $4.1 million was recorded as of June 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 June 30,				Six Months Ended June 30,
	2018		2017(1)		2018		2017(1)

Auto Buying Program revenue	$	75,271	$	69,366	$	147,608	$	134,520
OEM incentives revenue	7,927		7,837		12,348		13,115
Forecasts, consulting and other revenue	4,652		4,616		8,955		9,941
Total revenues	$	87,850	$	81,819	$	168,911	$	157,576


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