XML 30 R15.htm IDEA: XBRL DOCUMENT v3.22.4
Revenue Recognition
 12 Months Ended
Dec. 31, 2022
Revenue Recognition [Abstract]  
Revenue Recognition Revenue Recognition
The Company primarily recognizes revenue from the sale of its products and the operation of its venues. Revenue from product sales includes golf clubs, golf balls, lifestyle and outdoor apparel, gear and accessories, and golf apparel and accessories. The Company sells its products to customers, which include on- and off-course golf shops and national retail stores, as well as to consumers through its e-commerce business and at its apparel retail and venue locations. The Company’s product revenue also includes royalty income from third parties from the licensing of certain soft goods products. Revenue from services primarily includes venue sales of food and beverage, fees charged for gameplay, the sale of game credits to guests, franchise fees, sponsorship contracts, leasing revenue and non-refundable deposits received for venue reservations at Topgolf. In addition, the Company recognizes service revenue through its online multiplayer WGT digital golf game.
The Company’s contracts with customers for its products are generally in the form of a purchase order. In certain cases, the Company enters into sales agreements containing specific terms, discounts and allowances. The Company enters into licensing agreements with certain distributors and, with respect to the Company’s Toptracer operations, driving ranges and hospitality and entertainment venues.
The following table presents the Company’s revenue disaggregated by major category and operating and reportable segment (in millions):
Year Ended December 31,
202220212020
Topgolf:
Venues(1)
$1,477.1 $1,029.0 $— 
Other Topgolf business lines(1)
71.9 58.6 — 
Total Topgolf$1,549.0 $1,087.6 $— 
Golf Equipment:
Golf club$1,097.1 $994.5 $787.1 
Golf ball309.5 234.7 195.6 
Total Golf Equipment$1,406.6 $1,229.2 $982.7 
Active Lifestyle:
Apparel$631.7 $490.9 $349.3 
Gear, accessories & other408.4 325.7 257.5 
Total Active Lifestyle$1,040.1 $816.6 $606.8 
Total Consolidated$3,995.7 $3,133.4 $1,589.5 
(1) As of January 1, 2022, in order to align with the Company’s current management reporting structure, the Company began reporting revenues associated with corporate advertising sponsorship contracts in the venues business line within the Topgolf operating segment. These revenues were previously included within other Topgolf business lines. In order to conform to the current year presentation, revenue associated with corporate advertising sponsorship contracts of $15.0 million recognized from the merger date through December 31, 2021 was reclassified from other Topgolf business lines to venues for comparative purposes.
Venue product sales at the Company’s Topgolf operating segment include the sale of golf clubs, golf balls, apparel, gear and accessories. During the years ended December 31, 2022 and 2021, venue product sales totaled $18.7 million and $12.9 million, respectively.
Product and Service Revenue
The Company sells its Golf Equipment products and Active Lifestyle products in the United States and internationally, with its principal international regions being Europe and Asia. Golf Equipment product sales are generally higher than Active Lifestyle sales in most regions other than in Europe, which has a higher concentration of Active Lifestyle sales due to the Jack Wolfskin business. Revenue from venues is higher in the United States due to Topgolf having significantly more domestic venues than international venues. Revenue related to other business lines at Topgolf is predominantly in the United States and regions within Europe.
The following table summarizes revenue by geographical areas in which the Company operates (in millions):
Year Ended December 31,
202220212020
Revenue by Major Geographic Region(1):
United States$2,798.0 $2,067.1 $778.6 
Europe537.4 499.5 373.0 
Asia545.4 465.5 212.1 
Rest of World114.9 101.3 225.8 
$3,995.7 $3,133.4 $1,589.5 
(1) As of January 1, 2022, the Company modified the composition of its regions and combined Japan, Korea, China, South-East Asia and India into a single Asia region. These regions, except for Japan, were previously reported within Rest of World. As a result of this change, net revenues by region for the period presented in the prior year were recast to conform to the current year presentation.
Royalty Income
Royalty income is included in the Company’s Topgolf and Active Lifestyle operating segments and is primarily related to leasing agreements for Toptracer installations and Active Lifestyle licensing agreements, respectively. The following table summarizes royalty income by operating segment (in millions):
Year Ended December 31,
202220212020
Royalty Income:
Topgolf$50.3 $37.3 $— 
Active Lifestyle26.6 30.9 21.8 
Total$76.9 $68.2 $21.8 
Deferred Revenue
The Company’s deferred revenue balance includes short-term and long-term deferred revenue, which consists primarily of revenue from the sale of gift cards, event deposits, loyalty points, memberships and prepaid sponsorships at Topgolf, virtual currency and game credits related to the WGT digital golf game, as well as upfront territory fees and upfront franchise fees received from international franchise partners.
Revenue from gift cards is deferred and recognized when the cards are redeemed, which generally occurs within a 12-month period from the date of purchase. Revenue from the event deposits, loyalty points, memberships, prepaid sponsorships, game credits, and virtual currency related to the WGT digital golf game are recognized when redeemed or once the event or sponsorship occurs, over the estimated life of a customer’s membership, or based on historical currency or credit usage trends, as applicable, which generally occur within a one to thirty-six month period from the date of purchase. Revenue related to territory and franchise fees for each arrangement are allocated to each individual venue and recognized up to a 40-year term, including renewal options, per the respective franchise agreement.
The Company’s short-term deferred revenue balances for the years ended December 31, 2022 and December 31, 2021 primarily consist of event deposits and gift card purchases at Topgolf, of which the majority are generally recognized over a 12-month period from the date of purchase. The following table provides a reconciliation of activity related to the Company’s short-term deferred revenue balance (in millions):
Year Ended December 31,
202220212020
Beginning Balance$93.9 $2.5 $2.2 
Deferral of revenue646.4 459.6 3.1 
Revenue recognized(630.2)(360.2)(2.6)
Breakage(19.0)(10.3)(0.2)
Other/foreign currency translation3.8 2.3 — 
Ending Balance$94.9 $93.9 $2.5 
As of December 31, 2022 and December 31, 2021, the Company’s long-term deferred revenue balance was $3.2 million and $3.4 million, respectively, which is included in other long-term liabilities on the Company’s consolidated balance sheet.
Variable Consideration
The Company recognizes revenue based on the amount of consideration it expects to receive from customers for its products and services. The consideration is based on the sales price of the products and services adjusted for estimates of variable consideration, including sales returns, discounts and allowances as well as sales programs, sales promotions and price concessions that are offered by the Company. These estimates are based on the amounts earned or expected to be claimed by customers.
The following table provides a reconciliation of the activity related to the Company’s short-term sales program incentives for the periods presented (in millions):
Year Ended December 31,
202220212020
Beginning Balance$23.3 $26.2 $20.3 
Additions35.7 32.5 39.9 
Credits issued(32.9)(32.1)(34.7)
Other/foreign currency translation(5.3)(3.3)0.7 
Ending Balance$20.8 $23.3 $26.2 
The Company records an estimate for anticipated returns as a reduction of product revenues and cost of products, and accounts receivable, in the period that the related sales are recorded. The Company’s provision for the sales return liability fluctuates with the seasonality of the business, while actual sales returns are generally more heavily weighted toward the second half of the year as the golf season comes to an end. The following table provides a reconciliation of the activity related to the Company’s sales return reserve (in millions):
Year Ended December 31,
202220212020
Beginning Balance$47.4 $44.0 $29.0 
Provision128.4 91.0 106.2 
Sales returns(120.4)(87.6)(91.2)
Ending Balance$55.4 $47.4 $44.0 
The cost recovery of inventory associated with the sales return liability is accounted for in other current assets on the Company’s consolidated balance sheet. As of December 31, 2022 and December 31, 2021, the Company’s balance for cost recovery was $25.5 million and $25.9 million, respectively.