Segment and Geographic Information

12 Months Ended

Dec. 31, 2019

12. Segment and Geographic Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer.

The Company's operating and reportable segments are the U.S. and International. These segments reflect the way the CODM allocates resources and evaluates financial performance, which is based upon each segment's Adjusted EBITDA. Adjusted EBITDA is defined as loss before depreciation and amortization, equity-based compensation and related taxes, interest (expense), net, other (income) expense, net, provision for income taxes, net, non-recurring items, and other items not indicative of our ongoing operating performance. These charges are excluded from evaluation of segment performance because it facilitates reportable segment performance comparisons on a period-to-period basis as these costs may vary independent of business performance. The accounting policies of the segments are the same as those described in Note 2, Summary of Significant Accounting Policies.

The Company allocates certain operating expenses to the operating and reportable segments, including customer service and merchant fees and selling, operations, technology, general and administrative based on the usage and relative contribution

provided to the segments. It excludes from the allocations certain operating expense lines, including depreciation and amortization, equity-based compensation and related taxes, interest (expense), net, other (income) expense, net, and provision for income taxes, net. There are no revenue transactions between the Company's reportable segments.

U.S.

The U.S. segment primarily consists of amounts earned through product sales through the Company's family of sites in the U.S. and through websites operated by third parties in the U.S. The U.S. net revenue for the years ended December 31, 2018 and 2017 include $61.1 million and $77.7 million, respectively, of net revenue previously classified as other net revenue.

International

The International segment primarily consists of amounts earned through product sales through the Company's international sites.

Net revenue from external customers for each group of similar products and services are not reported to the CODM. Separate identification of this information for purposes of segment disclosure is impractical, as it is not readily available and the cost to develop it would be excessive. No individual country outside of the U.S. provided greater than 10% of consolidated net revenue.

The following tables present net revenues and Adjusted EBITDA attributable to the Company’s reportable segments for the periods presented:



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
U.S. net revenue	$	7,764,831	$	5,813,070	$	4,153,057
International net revenue	1,362,226		966,104		567,838
Total net revenue	$	9,127,057	$	6,779,174	$	4,720,895



	Year Ended December 31,
	2019			2018			2017
	(in thousands)
Adjusted EBITDA:
U.S.	$	(179,010	)	$	(19,049	)	$	35,888
International	(317,534		)	(195,937		)	(102,921		)
Total reportable segments Adjusted EBITDA	(496,544		)	(214,986		)	(67,033		)
Less: reconciling items (1)	(488,040		)	(289,094		)	(177,581		)
Net loss	$	(984,584	)	$	(504,080	)	$	(244,614	)

(1)The following adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss:



	Year Ended December 31,
	2019			2018			2017
	(in thousands)
Depreciation and amortization (1)	$	192,419		$	123,542		$	87,020
Equity-based compensation and related taxes	240,978			136,415			72,626
Interest (expense), net	54,514			28,560			9,433
Other (income) expense, net	(2,881		)	204			(758		)
Provision for income taxes, net	3,010			2,037			486
Other (1)	—			(1,664		)	8,774
Total reconciling items	$	488,040		$	289,094		$	177,581

(1) The Company recorded $9.6 million of one-time charges in the year ended December 31, 2017 in selling, operations, technology, general and administrative in the Consolidated Statements of Operations related to a warehouse the Company

vacated in July 2017. Of the $9.6 million charges, $8.8 million was included in other and related primarily to the excess of the Company's estimated future remaining lease commitments through 2023 over its expected sublease income over the same period, and $0.8 million was included in depreciation and amortization related to accelerated depreciation of leasehold improvements in the warehouse. In the year ended December 31, 2018, the Company terminated the lease and recognized in Other a $1.7 million one-time gain related to the difference in the expected future net lease commitments and the actual costs incurred to terminate the lease. The gain was recognized in selling, operations, technology, general and administrative in the Consolidated Statements of Operations.

The following table presents long-lived assets attributable to the Company's reportable segments reconciled to the amounts:



	Year Ended December 31,
	2019		2018
	(in thousands)
Geographic long-lived assets:
U.S.	$	731,963	$	470,260
International	144,803		31,303
Total reportable segment long-lived assets	876,766		501,563
Plus: reconciling corporate long-lived assets	511,178		105,414
Total long-lived assets	$	1,387,944	$	606,977

U.S. and International long-lived assets consist of property and equipment, net and operating lease right-of-use assets. Corporate long-lived assets consist of property and equipment, net and operating lease right-of-use assets at our corporate facilities.

The following table presents total assets attributable to the Company's reportable segments reconciled to consolidated amounts:



	Year Ended December 31,
	2019		2018
	(in thousands)
Assets by segment:
U.S.	$	1,076,733	$	738,600
International	190,167		55,159
Total reportable segment assets	1,266,900		793,759
Plus: reconciling corporate assets	1,686,148		1,097,091
Total assets	$	2,953,048	$	1,890,850

U.S. and International segment assets consist primarily of accounts receivable, inventories, prepaid expenses and other current assets, property and equipment, net and operating lease right-of-use assets. Corporate assets include cash and cash equivalents, short- and long-term investments, long-lived assets at our corporate facilities, goodwill and intangible assets, net, capitalized internal-use software and website development costs and other noncurrent assets.