Revenues

Revenue Recognition

The Company generates its revenues principally from subscriptions, either directly with advertisers or with advertising agencies, to its platform for the management of search, social, eCommerce and display advertising. It also generates a portion of its revenues from long-term strategic agreements with certain leading publishers. Revenues are recognized when control of these services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps:

●

Identification of the contract, or contracts, with a customer;

●

Identification of the performance obligations in the contract;

●

Determination of the transaction price;

●

Allocation of the transaction price to the performance obligations in the contract; and

●

Recognition of revenue when, or as, the Company satisfies its performance obligations.

Subscriptions

The Company's subscription contracts provide advertisers with access to the Company's advertising management platform. Advertisers do

not

have the right to take possession of the software supporting the services at any time. These contracts are generally

one

year or less in length. The subscription fee under most contracts consists of the greater of a minimum monthly platform fee or variable consideration based on the volume of advertising spend managed through the Company's platform at the contractual percentage of spend. The variable portion generally includes tiered pricing, whereby the percentage of spend charged decreases as the value of advertising spend increases. The tiered pricing resets monthly and is consistent throughout the contract term. The Company has concluded that this volume-based pricing approach does

not

constitute a future material right since the pricing tiers are consistent throughout the contract term and similar pricing is typically offered to similar classes of customers within the same geographical areas and markets. Certain subscription contracts consist of only a flat monthly platform fee. Subscription fees are generally invoiced on a monthly basis in arrears based on the actual amount of advertising spend managed on the platform. In certain limited circumstances, the Company will invoice an advertiser in advance for the contractual minimum monthly platform fee for a defined future period, which is typically

three

six

months.

The Company's subscription services comprise a single stand-ready performance obligation satisfied over time as the advertiser simultaneously receives and consumes the benefit from the Company's performance. This performance obligation constitutes a series of services that are substantially the same in nature and are provided over time using the same measure of progress. Revenues derived from these arrangements are recognized over time using an output method based upon the passage of time as this provides a faithful depiction of the pattern of transfer of control. Fixed minimum monthly platform fees are recognized ratably over the contract term as the single performance obligation is satisfied. Variable fees are allocated to the distinct month of the series in which they are earned because the terms of the variable payments relate specifically to the outcome from transferring the distinct time increment (month) of service and because such amounts reflect the fees to which the Company expects to be entitled for providing access to the advertising management platform for that period, consistent with the allocation objective of authoritative revenue guidance under Accounting Standards Codification

606

("ASC

606"

Strategic Agreements

The Company has entered into long-term strategic agreements with certain leading search publishers. Under these strategic agreements, the Company receives consideration based on a percentage of the search advertising spend that its customers manage on its platform. These strategic agreements are generally billed on a quarterly basis.

The majority of the Company's strategic agreement revenue is concentrated in

one

revenue share agreement, executed with Google in

December 2018,

with an effective date of

October 1, 2018 (

the "Google Revenue Share Agreement"). Under the Google Revenue Share Agreement, which constitutes a single performance obligation, the Company receives both fixed and variable revenue share payments based on a percentage of the search advertising spend that is managed through the Company's platform. The Google Revenue Share Agreement requires the Company to reinvest a specified percentage of these revenue share payments in its search technology platform to drive innovation. The performance obligation is satisfied ratably over the

two

-year contractual term using the output method based upon the passage of time, as Google simultaneously receives and consumes the benefit from the Company's performance, and this provides a faithful depiction of the pattern of transfer of control. The Google Revenue Share Agreement has a

three

-year term; however, after

two

years, Google

may

terminate the Google Revenue Share Agreement with

penalty if the Company does

not

meet certain financial metrics, and the Company evaluated the Google Revenue Share Agreement as a

two

-year agreement with

one

optional renewal year.

The Company evaluates the total amount of variable revenue share payments expected to be earned from the Google Revenue Share Agreement by using the expected value method, as it believes this method represents the most appropriate estimate for this consideration, based on historical service trends, the individual contract considerations and the Company's best judgment at the time. The Company includes estimates of variable consideration in revenues only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will

not

occur when the uncertainty associated with the variable consideration is subsequently resolved. For the

three

months ended

March 31, 2019,

the Company recognized

$2,921

in revenues from the Google Revenue Share Agreement. As of

March 31, 2019,

the Company expects to recognize revenues totaling approximately

$8,800

for each of the remaining

nine

months of

2019,

and for the year ending

December 31, 2020,

related to remaining performance obligations under the Google Revenue Share Agreement.

Disaggregation of Revenues

Revenues by geographic area, based on the billing location of the customer, were as follows for the periods presented:

	Three Months Ended March 31,
	2019		2018
United States of America	$	10,041	$	10,211
United Kingdom		1,545		2,110
Other (1)		1,862		3,081
Total revenues, net	$	13,448	$	15,402

(

)

individual country within the "Other" category accounted for

10%

or more of revenues, net for any period presented.

Revenues by nature of services performed were as follows for the periods presented:

	Three Months Ended March 31,
	2019		2018
Subscriptions	$	10,426	$	15,014
Strategic agreements		3,022		388
Total revenues, net	$	13,448	$	15,402

Contract Balances

Accounts Receivable, Net

The timing of revenue recognition

may

differ from the timing of invoicing to customers. Accounts receivable are recorded at the invoice amount, net of any necessary allowances for doubtful accounts and revenue credits. A receivable is recognized in the period the Company provides the underlying services or when the right to consideration is unconditional. The balances of accounts receivable, net of the allowances for doubtful accounts and revenue credits, as of

March 31, 2019

and

December 31, 2018

are presented in the accompanying condensed consolidated balance sheets. Included in the balance of accounts receivable, net as of

March 31, 2019

and

December 31, 2018

was

$3,450

and

$3,867,

respectively, related to the Google Revenue Share Agreement executed in

December 2018.

Customer Advances

The Company records advances from customers for cash payments that are received in advance of its performance of the underlying services. These services are contracted on a weekly basis and cash payments are generally received on a weekly basis at amounts that are at the discretion of the customers, based on established advertising budgets. The unused portion of these advances from customers is included within accruals and other current liabilities on the accompanying condensed consolidated balance sheets.

Under the Company's terms of service, individual customer advances that are

not

used by or refunded to the customer for a period of

180

days become the property of the Company. The Company recognizes advances from customers that have remained outstanding for this period of time as breakage revenues at the time the Company has received full consideration and has

remaining obligations to the customer. For the

three

months ended

March 31, 2019

and

2018,

the Company recognized

$59

and

$74,

respectively, in breakage revenues from balances previously included in the customer advances account.

Deferred Strategic Agreement Revenues

Due to the timing of revenue recognition on the Google Revenue Share Agreement, the contractual billings exceed revenue recognized to date, resulting in a contract liability. As of

March 31, 2019

and

December 31, 2018,

the Company recorded deferred strategic agreement revenues of

$1,463

and

$934,

respectively, within accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheets.

Costs to Obtain and Fulfill Contracts

The Company capitalizes certain contract acquisition costs, consisting primarily of commissions paid and the related payroll taxes that are incremental to obtaining customer contracts, when customer contracts are signed. The Company also capitalizes certain contract fulfillment costs, consisting primarily of the portion of the payroll and fringe benefits of the Company's professional services team that relates directly to performing on-boarding and integration services for new and existing customers (collectively, "deferred costs to obtain and fulfill contracts").

The deferred costs to obtain and fulfill contracts are amortized over the expected period of benefit, which the Company has determined to be approximately

two

three

years. This expected period of benefit takes into consideration the duration of the Company’s customer contracts, historical contract renewal rates, the underlying technology and other factors. Amortization expense for deferred costs to obtain and fulfill contracts is included in sales and marketing expense and cost of sales, respectively, on the accompanying condensed consolidated statements of operations.

The Company classifies deferred costs to obtain and fulfill contracts as current or non-current based on the timing of when the related amortization expense is expected be recognized. The current portion of these deferred costs is included in prepaid expenses and other current assets, while the non-current portion is included in other non-current assets on the accompanying condensed consolidated balance sheets. Changes in the balances of deferred costs to obtain and fulfill contracts during the

three

months ended

March 31, 2019

were as follows:

	Deferred Costs to Obtain Contracts			Deferred Costs to Fulfill Contracts
Balances at December 31, 2018	$	1,413		$	606
Costs deferred		99			63
Amortization		(242	)		(122	)
Balances at March 31, 2019	$	1,270		$	547