Revenue Recognition

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

We primarily recognize revenue from the sale of our products and the operation of our Topgolf venues. The following table presents our revenue disaggregated by operating and reportable segment and major category for the periods presented (in millions):

	Three Months Ended March 31,
	2024		2023
Topgolf:
Venues	$	405.7	$	386.7
Other business lines	17.1		16.8
Total Topgolf	422.8		403.5
Golf Equipment:
Golf clubs	$	345.9	$	350.8
Golf balls	104.0		92.9
Total Golf Equipment	449.9		443.7
Active Lifestyle:
Apparel	$	159.6	$	176.1
Gear, accessories & other	111.9		144.1
Total Active Lifestyle	271.5		320.2
Total Consolidated	$	1,144.2	$	1,167.4

Venues sales at our Topgolf operating segment include the sale of merchandise and franchise equipment. During the three months ended March 31, 2024 and 2023, venue merchandise and franchise equipment sales, which are included in product sales on our condensed consolidated statement of operations, were $4.7 million and $3.7 million, respectively.

Product and Service Revenue

We sell our Golf Equipment products and Active Lifestyle products in the United States and internationally. Revenue for our Topgolf operating segment is predominately in the United States due to significantly more domestic venues than international venues. Revenue related to other business lines at Topgolf is primarily in the United States, in addition to certain regions within Europe and Asia.

The following table summarizes our revenue by major geographic region for the periods presented (in millions):

	Three Months Ended March 31,
	2024		2023
Revenue by Major Geographic Region:
United States	$	829.0	$	811.1
Europe	141.4		153.6
Asia	127.6		160.2
Rest of world	46.2		42.5
Total Consolidated	$	1,144.2	$	1,167.4

Licensing, Royalty and Other Revenue

We have licensing and royalty income on non-cancelable sales-type leases and operating lease agreements for Toptracer installations and Swing Suite licensing agreements at our Topgolf operating segment (see Note 5), in addition to income from licensing agreements for apparel and soft good products in our Active Lifestyle operating segment. The following table summarizes these revenues by operating segment for the periods presented (in millions):

	Three Months Ended March 31,
	2024		2023
Topgolf	$	12.7	$	12.1
Active Lifestyle	6.1		6.7
Total	$	18.8	$	18.8

Deferred Revenue

Our deferred revenue balance includes short-term and long-term deferred revenue which consists primarily of revenue from the sale of gift cards, event deposits, memberships and partnerships at Topgolf, loyalty points, virtual currency and game credits related to digital golf games, as well as upfront territory fees and upfront franchise fees received from international franchise partners.

The following table provides a reconciliation of activity related to our short-term deferred revenue balance for the periods presented (in millions):

	Three Months Ended March 31,
	2024		2023
Beginning Balance	$	110.9	$	94.9
Deferral of revenue	146.0		157.8
Revenue recognized	(138.7)		(142.8)
Breakage	(11.4)		(7.0)
Foreign currency translation and other	(0.1)		(0.1)
Ending Balance	$	106.7	$	102.8

At both March 31, 2024 and December 31, 2023, our long-term deferred revenue balance was $3.7 million.

The following table summarizes the amount of the deferred revenue recognized during the periods presented which were included in the deferred revenue balances as of the end of the prior year reporting period (in millions):

	Three Months Ended March 31,
	2024		2023
Deferred revenue recognized from prior year ending balance	$	33.4	$	29.5

Variable Consideration

We recognize revenue based on the amount of consideration we expect to receive from customers for the sale of our products and services adjusted for estimates of variable consideration related to sales returns, discounts and allowances, sales promotions and sales programs, and price concessions that we offer. 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 our short-term sales program incentives for the periods presented (in millions):

	Three Months Ended March 31,
	2024		2023
Beginning Balance	$	16.5	$	20.8
Additions	16.4		15.5
Credits issued	(10.0)		(10.7)
Foreign currency translation and other	(0.3)		(0.1)
Ending Balance	$	22.6	$	25.5

Our provision for the sales return liability fluctuates with the seasonality of the business. Actual sales returns are 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 our sales return reserve for the periods presented (in millions):

	Three Months Ended March 31,
	2024		2023
Beginning Balance	$	55.9	$	55.4
Provision	65.6		58.9
Sales returns	(42.6)		(41.6)
Ending Balance	$	78.9	$	72.7

As of March 31, 2024 and December 31, 2023, the cost recovery of inventory associated with the sales return liability was $35.4 million and $25.7 million, respectively, and is included in other current assets on our condensed consolidated balance sheet.