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Revenue
 3 Months Ended
Mar. 31, 2021
Revenue From Contract With Customer [Abstract]  
Revenue

2. Revenue

We determine revenue recognition by first identifying the contract or contracts with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognizing revenue when, or as, we satisfy a performance obligation.

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We determine collectability by performing ongoing credit evaluations and monitoring customer accounts receivable balances. Sales tax, including value added tax, is excluded from reported revenue.

We generate substantially all of our revenues by offering various advertising products on Snapchat, which include Snap Ads and AR Ads, referred to as advertising revenue. AR Ads include Sponsored Filters and Sponsored Lenses. Sponsored Filters allow users to interact with an advertiser’s brand by enabling stylized brand artwork to be overlaid on a Snap. Sponsored Lenses allow users to interact with an advertiser’s brand by enabling branded augmented reality experiences.

The substantial majority of advertising revenue is generated from the display of advertisements on Snapchat through contractual agreements that are either on a fixed fee basis over a period of time or based on the number of advertising impressions delivered. Revenue related to agreements based on the number of impressions delivered is recognized when the advertisement is displayed. Revenue related to fixed fee arrangements is recognized ratably over the service period, typically less than 30 days in duration, and such arrangements do not contain minimum impression guarantees.

In arrangements where another party is involved in providing specified services to a customer, we evaluate whether we are the principal or agent. In this evaluation, we consider if we obtain control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price. For advertising revenue arrangements where we are not the principal, we recognize revenue on a net basis. For the periods presented, revenue for arrangements where we are the agent was not material.

We also generate revenue from sales of hardware. For the periods presented, revenue from the sales of hardware was not material.

The following table represents our revenue disaggregated by geography based on the billing address of the advertising customer:

 

 

Three Months Ended March 31,

 

 

2021

 

 

2020

 

 

(in thousands)

 

Revenue:

 

 

 

 

 

 

 

North America (1) (2)

$

531,363

 

 

$

281,274

 

Europe (3)

 

129,118

 

 

 

81,077

 

Rest of world

 

109,103

 

 

 

100,127

 

Total revenue

$

769,584

 

 

$

462,478

 

 

(1)

North America includes Mexico, the Caribbean, and Central America.

(2)

United States revenue was $514.6 million and $273.2 million for the three months ended March 31, 2021 and 2020, respectively.

(3)

Europe includes Russia and Turkey.