2. Revenue from Contracts with Customers

On January 1, 2018, we adopted ASC Topic 606 using the modified retrospective transition method applied to contracts that were not complete as of the adoption date. Consolidated financial results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts continue to be reported in accordance with ASC Topic 605, “Revenue Recognition”.

As of January 1, 2018, we recorded a net reduction of $4.0 million to our opening deferred revenue and accumulated deficit balances, net of tax, due to the cumulative impact of adopting ASC Topic 606. The impact was driven by the recognition of revenue for certain advertising arrangements for which revenue was not previously recognized until payment was certain, partially offset by the deferral of previously recognized revenue for a symbolic license arrangement, for which revenue is recognized over the term of the license under ASC Topic 606.

The impact of adopting ASC Topic 606 on our consolidated balance sheet as of September 30, 2018 was as follows (in thousands):

	As of September 30, 2018
	Amounts as Reported			Amounts without Adoption of ASC Topic 606			Increase (Decrease) from ASC Topic 606 Adoption
Current liabilities:
Deferred revenue	$	172,172		$	183,158		$	(10,986	)
Total current liabilities		302,930			313,916			(10,986	)
Deferred revenue		2,135			1,523			612
Total liabilities		402,989			413,363			(10,374	)
Accumulated deficit		(1,766,019	)		(1,776,393	)		10,374
Total stockholders' equity		1,616,438			1,606,064			10,374
Total liabilities and stockholders' equity	$	2,019,427		$	2,019,427		$	—

As a result of adopting ASC Topic 606, deferred revenue as of September 30, 2018 decreased from certain advertising arrangements for which revenue would otherwise not be recognized until payment was certain under ASC Topic 605, partially offset by an increase to deferred revenue associated with the deferral of previously recognized revenue from the aforementioned symbolic license arrangement. The increase to stockholders’ equity as of September 30, 2018 from adopting ASC Topic 606 is the result of the net income impact discussed below and the $4.0 million transition adjustment recognized upon adoption of ASC Topic 606 on January 1, 2018.

The impact of adopting ASC Topic 606 on our consolidated statement of operations three and nine months ended September 30, 2018 was as follows (in thousands):

	Three Months Ended September 30, 2018
	Amounts as Reported		Amounts without Adoption of ASC Topic 606		Increase (Decrease) from ASC Topic 606 Adoption
Revenue:
Advertising and other	$	65,527	$	63,117	$	2,410
Total revenue		233,243		230,833		2,410
Income (loss) from operations		4,770		2,360		2,410
Income (loss) before taxes		10,205		7,795		2,410
Net income (loss)	$	10,200	$	7,790	$	2,410

Net income (loss) per share attributable to common stockholders:
Basic	$	0.01	$	0.01	$	0.00
Diluted	$	0.01	$	0.01	$	0.00

	Nine Months Ended September, 2018
	Amounts as Reported		Amounts without Adoption of ASC Topic 606			Increase (Decrease) from ASC Topic 606 Adoption
Revenue:
Advertising and other	$	164,571	$	158,221		$	6,350
Total revenue		658,520		652,170			6,350
Income (loss) from operations		6,041		(309	)		6,350
Income (loss) before taxes		21,092		14,742			6,350
Net income (loss)	$	14,898	$	8,548		$	6,350

Net income (loss) per share attributable to common stockholders:
Basic	$	0.02	$	0.01		$	0.01
Diluted	$	0.02	$	0.01		$	0.01

As a result of adopting ASC Topic 606 during the three and nine months ended September 30, 2018, advertising and other revenue increased primarily as a result of the aforementioned recognition of revenue for certain advertising arrangements for which revenue would otherwise not be recognized until payment was certain under ASC Topic 605 and the recognition of revenue over time from the symbolic license. There was no impact to net cash flows provided by (used in) operating, investing or financing activities for the nine months ended September 30, 2018 as a result of adopting ASC Topic 606. However, within cash flows from operating activities, net income (loss) is $6.4 million higher and the change in deferred revenue is $6.4 million lower as a result of adopting ASC Topic 606 during the nine months ended September 30, 2018.

Disaggregation of Revenue

The following table presents our revenue disaggregated by platform (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017⁽¹⁾		2018		2017⁽¹⁾
Online game:
Mobile	$	149,095	$	150,730	$	431,952	$	417,219
Web		18,621		24,523		61,997		75,260
Online game total	$	167,716	$	175,253	$	493,949	$	492,479
Advertising and other:
Mobile		63,371		43,660		155,860		118,652
Web		2,075		2,692		6,657		12,184
Other		81		2,990		2,054		4,795
Advertising and other total	$	65,527	$	49,342	$	164,571	$	135,631
Total revenue	$	233,243	$	224,595	$	658,520	$	628,110

(1)

Amounts have not been retrospectively adjusted to reflect the adoption of ASC Topic 606.

The following table presents our revenue disaggregated based on the geographic location of our payers (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017⁽¹⁾		2018		2017⁽¹⁾
United States	$	153,752	$	145,255	$	432,289	$	413,228
All other countries⁽²⁾		79,491		79,340		226,231		214,882
Total revenue	$	233,243	$	224,595	$	658,520	$	628,110

(1)

Amounts have not been retrospectively adjusted to reflect the adoption of ASC Topic 606.

(2)

No foreign country exceeded 10% of our total revenue for any periods presented.

Consumable virtual items accounted for 42% of online game revenue in the three months ended September 30, 2018 and 43% of online game revenue in the same period of the prior year. Durable virtual items accounted for 58% of online game revenue in the three months ended September 30, 2018 and 57% of online game revenue in the same period of the prior year. The estimated weighted average life of durable virtual items was 9 months in the three months ended September 30, 2018, compared to 8 months in the same period of the prior year.

Consumable virtual items accounted for 45% of online game revenue in the nine months ended September 30, 2018 and 2017. Durable virtual items accounted for 55% of online game revenue in the nine months ended September 30, 2018 and 2017. The estimated weighted average life of durable virtual items was 9 months in the nine months ended September 30, 2018, compared to 8 months in the same period of the prior year.

Contract Balances

We receive payments from our customers based on the payment terms established in our contracts. Payments for online game revenue are required at time of purchase, are non-refundable and relate to non-cancellable contracts that specify our performance obligations. Such payments are initially recorded to deferred revenue and are recognized into revenue as we satisfy our performance obligations.

Payments for advertising arrangements are due based on the contractually stated payment terms. For advertising arrangements, the contract terms generally require payment within 30 to 60 days subsequent to the end of the month. Our right to payment from the customer is unconditional and therefore recorded as accounts receivable.

During the three and nine months ended September 30, 2018, we recognized $9.9 million and $128.1 million, respectively, of revenue that was included in the current deferred revenue balance on January 1, 2018.

The increase in accounts receivable, net during the nine months ended September 30, 2018 was primarily driven by a net increase in accounts receivable of $10.7 million on the acquisition date from our acquisition of Gram Games Teknoloji A.S (“Gram Games”), partially offset by cash collections of current period and previously due amounts exceeding sales on account during the period. The increase in deferred revenue during the nine months ended September 30, 2018 was primarily driven by the sale of virtual items during the period, which includes contribution from Gram Games, exceeding revenue recognized from the satisfaction of our performance obligations.

Unsatisfied Performance Obligations

Substantially all of our unsatisfied performance obligations relate to contracts with an original expected length of one year or less.