REVENUE FROM CONTRACTS WITH CUSTOMERS

Impacts on financial statement line items

Adoption of the New Revenue Accounting Standard had the following impact on our Condensed Consolidated Statement of Operations for the three months ended June 30, 2018:



	Amounts as reported			Amounts without adoption of New Revenue Accounting Standard			Increase (decrease) due to adoption of New Revenue Accounting Standard
Net revenue	387,982			401,981			(13,999	)
Cost of goods sold	131,365			157,089			(25,724	)
Gross profit	256,617			244,892			11,725
General and administrative	67,735			67,735			—
Selling and marketing	58,306			58,306			—
Research and development	50,712			50,712			—
Business reorganization	(242		)	(242		)	—
Depreciation and amortization	9,260			9,260			—
Total operating expenses	185,771			185,771			—
Income from operations	70,846			59,121			11,725
Interest and other, net	6,601			6,013			588
Income before income taxes	77,447			65,134			12,313
Provision for (benefit from) income taxes	5,754			(1,970		)	7,724
Net income	71,693			67,104			4,589
Earnings per share:
Basic earnings per share	$	0.63		$	0.59
Diluted earnings per share	$	0.62		$	0.58

Adoption of the New Revenue Accounting Standard had the following impact on our Condensed Consolidated Balance Sheet as of June 30, 2018:



	Amounts as reported			Amounts without adoption of New Revenue Accounting Standard			Increase (decrease) due to adoption of New Revenue Accounting Standard
ASSETS
Accounts receivable, net	$	239,736		$	197,465		$	42,271
Software development costs and licenses	12,676			17,571			(4,895		)
Deferred cost of goods sold	19,141			83,632			(64,491		)
Prepaid expenses and other	180,512			121,359			59,153
Deferred cost of goods sold, net of current portion	736			19,414			(18,678		)
Other assets	75,917			59,696			16,221

LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other current liabilities	$	906,881		$	854,006		$	52,875
Deferred revenue	450,568			703,172			(252,604		)
Non-current deferred revenue	15,861			296,541			(280,680		)
Other long-term liabilities	191,490			155,111			36,379
Retained earnings	615,482			140,620			474,862
Accumulated other comprehensive loss	(41,015		)	(39,764		)	(1,251		)

The adoption of the New Revenue Standard had no impact on our cash flows.

Disaggregation of revenue

Product revenue

Product revenue is primarily comprised of the portion of revenue from software products that is recognized when the customer takes control of the product (i.e. upon delivery of the software product).

Service and other revenue

Service and other revenue is primarily comprised of revenue from game related services, virtual currency transactions and in-game purchases which are recognized over an estimated service period.

Net revenue by product revenue and service and other was as follows:



		Three Months Ended June 30,
		2018
Net revenue recognized:
Product		78,795
Service and other		309,187
Total net revenue		387,982

Full game and other revenue

Full game and other revenue primarily includes the initial sale of full game software products, which may include offline and/or significant game related services.

Recurrent consumer spending revenue

Recurrent consumer spending revenue is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, and in-game purchases.

Net revenue by full game and other revenue and recurrent consumer spending was as follows:



	Three Months Ended June 30,
	2018
Net revenue recognized:
Recurrent consumer spending	241,030
Full game and other	$	146,952
Total net revenue	$	387,982

Geography

We attribute net revenue to geographic regions based on software product destination. Net revenue by geographic region was as follows:



	Three Months Ended June 30,
	2018
Net revenue recognized:
United States	$	221,411
International	166,571
Total net revenue	$	387,982

Platform

Net revenue by platform was as follows:



	Three Months Ended June 30,
	2018
Net revenue recognized:
Console	$	294,730
PC and other	93,252
Total net revenue	$	387,982

Distribution channel

Our products are delivered through digital online services (digital download, online platforms and cloud streaming) and physical retail and other. Net revenue by distribution channel was as follows:



	Three Months Ended June 30,
	2018
Net revenue recognized:
Digital online	$	315,047
Physical retail and other	72,935
Total net revenue	$	387,982

Deferred Revenue

We record deferred revenue when payments are due or received in advance of the fulfillment of our associated performance obligations. The opening balance and ending balance of deferred revenue, including current and non-current balances as of April 1, 2018 and June 30, 2018 was $566,141 and $466,429, respectively. For the three months ended June 30, 2018, the additions to our deferred revenue balance were primarily due to cash payments received or due in advance of satisfying our performance obligations, while the reductions to our deferred revenue balance were primarily due to the recognition of revenue upon fulfillment of our performance obligations, both of which were in the ordinary course of business.

During the three months ended June 30, 2018, $240,485 of revenue was recognized that was included in the deferred revenue balance at the beginning of the period. As of June 30, 2018, the aggregate amount of contract revenue allocated to unsatisfied performance obligations is $466,429. We expect to recognize approximately $450,568 of this balance as revenue over the next 12 months, and the remainder thereafter.

As of April 1, 2018 and June 30, 2018 our contract asset balance was $69,522 and $66,668, respectively.