Revenue, Deferred Revenue, and Deferred Costs and Other

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue, Deferred Revenue and Deferred Costs and Other

Revenue Recognition

We adopted ASC 606 for the year ended December 31, 2019 using the modified retrospective method for client contracts that were not completed as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented in accordance with ASC 606, while prior year results are not adjusted and are presented in accordance with ASC 605. The adoption of ASC 606 did not have a material impact on revenue recognized for the year ended December 31, 2019.

The following tables summarize the impact of ASC 606 adoption on our financial condition and results of operations for the year ended December 31, 2019:



	As of December 31, 2019
	ASC 605			Impact of Adoption			ASC 606
	(in thousands)
Assets:
Deferred costs and other, current	$	14,745		$	1,306		$	16,051
Total current assets	$	486,201		$	1,306		$	487,507
Deferred costs and other, noncurrent	$	3,833		$	1,867		$	5,700
Total assets	$	557,388		$	3,173		$	560,561
Liabilities, redeemable convertible preferred stock and stockholders' deficit:
Accrued expenses and other current liabilities	$	28,812		$	(1,011	)	$	27,801
Deferred revenue, current	$	4,087		$	(142	)	$	3,945
Total current liabilities	$	43,028		$	(1,153	)	$	41,875
Total liabilities	$	54,350		$	(1,153	)	$	53,197
Accumulated deficit	$	(168,524	)	$	4,326		$	(164,198	)
Total stockholders' equity	$	503,038		$	4,326		$	507,364
Total liabilities, redeemable convertible preferred stock and stockholders' equity	$	557,388		$	3,173		$	560,561



	Year Ended December 31, 2019
	ASC 605			Impact of Adoption			ASC 606
	(in thousands, except per share data)
Revenue	$	169,853		$	345		$	170,198
Gross profit	$	123,695		$	345		$	124,040
Sales and marketing	$	77,357		$	703		$	78,060
Total operating expenses	$	183,718		$	703		$	184,421
Loss from operations	$	(60,023	)	$	(358	)	$	(60,381	)
Loss before provision for income tax	$	(56,281	)	$	(358	)	$	(56,639	)
Net Loss	$	(54,912	)	$	(358	)	$	(55,270	)
Net loss attributable to common stockholders	$	(55,008	)	$	(358	)	$	(55,366	)
Net loss per share attributable to common stockholders, basic and diluted	$	(1.08	)	$	(0.01	)	$	(1.09	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	50,930						50,930

The adoption of ASC 606 had no impact on our total cash flows from operating, investing or financing activities for the year ended December 31, 2019.

Deferred Revenue

Deferred revenue activity is as follows (in thousands):



	Year ended December 31, 2019
Beginning balance as of January 1, 2019	$	2,051
Amounts billed but unrecognized	7,208
Revenue recognized	(6,067		)
Assumed from business combination	1,407
Ending balance as of December 31, 2019	$	4,599
Reported as:
Deferred revenue, current	$	3,945
Deferred revenue, noncurrent	654
Total deferred revenue	$	4,599

We expect to recognize $4.1 million and $0.7 million of revenue in 2020 and 2021, respectively, related to future performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2019.

Accrued Rebates

Accrued rebates represent the amounts in client contracts that are subject to pricing adjustments based on various performance metrics, such as member satisfaction scores, cost savings guarantees and health outcome guarantees, which if not met typically require us to refund a portion of the per participant per month fee paid. We defer an estimate of the amount of consideration that we expect to refund to our clients from the monthly per participant per month fee until the performance metric is met. Accrued rebates are recorded within accrued expenses and other current liabilities and the activity is as follows (in thousands):



	Year ended December 31, 2019
Beginning balance as of January 1, 2019	$	609
ASC 606 adoption date impact adjustment	(222		)
Amount deferred	945
Revenue recognized	—
Payments	(180		)
Ending balance as of December 31, 2019	$	1,152

Deferred Costs and Other

Deferred costs and other as of December 31, 2019 consist of the following (in thousands):



	As of December 31, 2019
Deferred costs and other, current:
Deferred device costs, current	$	14,746
Deferred contract costs, current	1,121
Deferred execution credits, current	184
Total deferred costs and other, current	$	16,051
Deferred costs and other, noncurrent:
Deferred device costs, noncurrent	$	3,833
Deferred contract costs, noncurrent	1,867
Total deferred costs and other, noncurrent	$	5,700
Total deferred costs and other	$	21,751

Deferred costs and other activity is as follows (in thousands):



	Year Ended December 31, 2019
	Deferred Device Costs			Deferred Contract Costs			Deferred Execution Credits			Total
Beginning balance as of January 1, 2019	$	8,469		$	—		$	—		$	8,469
ASC 606 adoption date impact adjustment	—			3,692			771			4,463
Additions	24,773			354			328			25,455
Revenue recognized	—			—			(915		)	(915		)
Cost of revenue recognized	(14,663		)	—			—			(14,663		)
Sales and marketing expenses recognized	—			(1,058		)	—			(1,058		)
Ending balance as of December 31, 2019	$	18,579		$	2,988		$	184		$	21,751

ASC 606 Adoption Impact to Financial Statements

We adopted ASC 606 for the year ended December 31, 2019 for all customer contracts that were not completed as of January 1, 2019 using the modified retrospective method, which does not require prior year results to be presented under ASC 606. Accordingly, the consolidated financial condition and results of operations for the years ended December 31, 2018 and 2017 are presented in accordance with ASC 605, Revenue Recognition. Results of operations for the interim periods during 2019 have been adjusted to reflect the ASC 606 impact as if we adopted ASC 606 on January 1, 2019. Refer to Supplemental Quarterly Financial Data for impact on the interim periods during the year ended December 31, 2019.

The adoption of ASC 606 had no impact on our total cash flows from operating, investing or financing activities for each of the three months ended March 31, June 30, September 30, and December 31, 2019.