REVENUE RECOGNITION (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Prospective Adoption of New Accounting Pronouncements

The Company recorded a net reduction to its opening accumulated deficit of $88.9 million, which is net of a $6.7 million income tax effect, as of January 1, 2018 due to the cumulative impact of adopting Topic 606. The following table summarizes balance sheet accounts impacted by the cumulative effect of adopting Topic 606 (in thousands):



Account	Increase (decrease) to beginning accumulated deficit
Prepaid expenses and other current assets	$	(4,007	)
Other non-current assets	(10,223		)
Accrued merchant and supplier payables	(64,970		)
Accrued expenses and other current liabilities	(13,188		)
Other non-current liabilities	3,443
Effect on beginning accumulated deficit	$	(88,945	)

See Note 2, Adoption of New Accounting Standards, for additional information about the Company's revenue recognition policies before and after the adoption of Topic 606.

Impacts on Condensed Consolidated Financial Statements

The following tables summarize the impacts of adopting Topic 606 on the Company's condensed consolidated financial statements as of and for the three and six months ended June 30, 2018 (in thousands):

Condensed Consolidated Balance Sheet



	June 30, 2018
	As reported		Adjustments			Balances without adoption of Topic 606
Total assets	$	1,488,700	$	(11,638	)	$	1,477,062
Total liabilities	1,217,563		86,124			1,303,687
Total equity	271,137		(97,762		)	173,375

Condensed Consolidated Statements of Operations



	Three Months Ended June 30, 2018									Six Months Ended June 30, 2018
	As reported			Adjustments			Balances without adoption of Topic 606			As reported			Adjustments			Balances without adoption of Topic 606
Revenue:
Service revenue ⁽¹⁾⁽²⁾	$	295,652		$	6,001		$	301,653		$	597,449		$	4,222		$	601,671
Product revenue	321,744			—			321,744			646,487			—			646,487
Total revenue	617,396			6,001			623,397			1,243,936			4,222			1,248,158
Cost of revenue:
Service cost of revenue ⁽³⁾	30,230			7,043			37,273			61,375			13,318			74,693
Product cost of revenue	263,508			—			263,508			534,018			—			534,018
Cost of revenue ⁽³⁾	293,738			7,043			300,781			595,393			13,318			608,711
Gross profit	323,658			(1,042		)	322,616			648,543			(9,096		)	639,447
Operating expenses:
Marketing ⁽⁴⁾	94,178			2,134			96,312			193,334			3,707			197,041
Selling, general and administrative ⁽⁵⁾	294,124			(1,227		)	292,897			516,185			(2,491		)	513,694
Restructuring charges	(399		)	—			(399		)	(116		)	—			(116		)
Total operating expenses	387,903			907			388,810			709,403			1,216			710,619
Income (loss) from operations	(64,245		)	(1,949		)	(66,194		)	(60,860		)	(10,312		)	(71,172		)
Other income (expense), net	(26,457		)	—			(26,457		)	(34,972		)	—			(34,972		)
Income (loss) before provision (benefit) for income taxes	(90,702		)	(1,949		)	(92,651		)	(95,832		)	(10,312		)	(106,144		)
Provision (benefit) for income taxes ⁽⁶⁾	1,552			886			2,438			(783		)	(133		)	(916		)
Net income (loss)	$	(92,254	)	$	(2,835	)	$	(95,089	)	$	(95,049	)	$	(10,179	)	$	(105,228	)

(1)

For the three months ended June 30, 2018, reflects a $9.2 million increase for refunds on service revenue transactions for which the merchant's share is not recoverable and customer credits issued for relationship purposes, which are classified as reductions of revenue under Topic 606, and an increase of $0.5 million related to the timing of recognition of revenue from hotel reservation offerings, partially offset by decreases of $2.9 million related to the timing of recognition of variable consideration from unredeemed vouchers and $0.8 million related to the timing of recognition of breakage revenue from customer credits that are not expected to be used.

(2)

For the six months ended June 30, 2018, reflects a $17.0 million increase for refunds on service revenue transactions for which the merchant's share is not recoverable and customer credits issued for relationship purposes, which are classified as reductions of revenue under Topic 606, partially offset by decreases of $8.5 million related to the timing of recognition of variable consideration from unredeemed vouchers, $2.8 million related to the timing of recognition of revenue from hotel reservation offerings and $1.5 million related to the timing of recognition of breakage revenue from customer credits that are not expected to be used.


(3)	Reflects an increase for refunds on service revenue transactions for which the merchant's share is not recoverable, which are classified as a reduction of revenue under Topic 606.


(4)	Reflects an increase for customer credits issued for relationship purposes, which are classified as a reduction of revenue under Topic 606.


(5)	Reflects the amortization of deferred contract acquisition costs in excess of amounts capitalized in the current period.


(6)	As discussed in Note 13, Income Taxes, for the six months ended June 30, 2018, the Company recognized an income tax benefit of $6.4 million resulting from the impact of adopting Topic 606 on intercompany activity in certain foreign jurisdictions. That income tax benefit is not reflected in this table, which presents the direct impacts of adopting Topic 606.

Disaggregation of Revenue



	Three Months Ended June 30, 2018							Six Months Ended June 30, 2018
	As reported		Adjustments			Balances without adoption of Topic 606		As reported		Adjustments			Balances without adoption of Topic 606
North America
Service revenue:
Local	$	185,870	$	913		$	186,783	$	373,281	$	4,526		$	377,807
Goods	3,796		95			3,891		8,670		95			8,765
Travel	19,888		678			20,566		39,972		(2,401		)	37,571
Product revenue - Goods	170,710		—			170,710		351,597		—			351,597
Total North America revenue	380,264		1,686			381,950		773,520		2,220			775,740

International
Service revenue:
Local	71,425		3,946			75,371		146,003		2,500			148,503
Goods	4,967		(557		)	4,410		8,381		(796		)	7,585
Travel	9,706		926			10,632		21,142		298			21,440
Product revenue - Goods	151,034		—			151,034		294,890		—			294,890
Total International revenue	237,132		4,315			241,447		470,416		2,002			472,418

Consolidated
Service revenue:
Local	257,295		4,859			262,154		519,284		7,026			526,310
Goods	8,763		(462		)	8,301		17,051		(701		)	16,350
Travel	29,594		1,604			31,198		61,114		(2,103		)	59,011
Product revenue - Goods	321,744		—			321,744		646,487		—			646,487
Total Consolidated Revenue	$	617,396	$	6,001		$	623,397	$	1,243,936	$	4,222		$	1,248,158

Deferred Revenue, by Arrangement, Disclosure

The following table summarizes the activity in the liability for customer credits for the six months ended June 30, 2018 (in thousands):



	Customer Credits
Balance as of January 1, 2018	$	19,414
Credits issued	67,025
Credits redeemed ⁽¹⁾	(57,074		)
Breakage revenue recognized	(10,961		)
Foreign currency translation	(88		)
Balance as of June 30, 2018	$	18,316

(1)

Customer credits can be redeemed through the Company's online marketplaces for goods or services provided by a third-party merchant or for merchandise inventory sold by the Company. When customer credits are redeemed for goods or services provided by a third-party merchant, service revenue is recognized on a net basis as the difference between the carrying amount of the customer credit liability derecognized and the amount due to the merchant for the related transaction. When customer credits are redeemed for merchandise inventory sold by the Company, product revenue is recognized on a gross basis equal to the amount of the customer credit liability derecognized. Customer credits are primarily used within one year of issuance.

The following table summarizes the activity in revenue deferred from contracts with customers for the six months ended June 30, 2018 (in thousands):



	Deferred Revenue
Balance as of January 1, 2018	$	25,763
Revenue deferred	21,802
Revenue recognized	(25,364		)
Foreign currency translation	(399		)
Balance as of June 30, 2018	$	21,802