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Revenue Recognition
 6 Months Ended
Jun. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 4. Revenue Recognition
The Company primarily recognizes revenue from the sale of its products and operation of its venues. Revenue from product sales include 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 revenues 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 and fees charged for gameplay, and the sale of game credits to guests. Service revenues also include franchise fees from franchised international venues, as well as revenue from gift cards, sponsorship contracts, franchise fees, leasing revenue and non-refundable deposits received for venue reservations. In addition, the Company recognizes service revenues 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 Company has three operating and reportable segments, namely the Golf Equipment operating segment, the Apparel, Gear and Other operating segment, and the Topgolf operating segment. On March 8, 2021, the Company completed its merger with Topgolf. The Company’s results of operations, therefore, include the operations of Topgolf from that date forward. Topgolf contributed $325,453,000 in net revenues for the three months ended June 30, 2021, and $418,090,000 for the six months ended June 30, 2021, which includes approximately four months of revenues since the completion of the merger.
The following table presents the Company's revenue disaggregated by major product category and operating and reportable segment (in thousands):
Operating and Reportable Segments
Three Months Ended June 30, 2021Three Months Ended June 30, 2020
Golf EquipmentApparel, Gear
& Other		TopgolfTotalGolf EquipmentApparel, Gear
& Other		Total
Major revenue categories:
Golf clubs$319,973 $— $— $319,973 $156,040 $— $156,040 
Golf balls81,286 — — 81,286 53,903 — 53,903 
Apparel— 91,413 — 91,413 — 36,302 36,302 
Gear, accessories & other— 95,516 — 95,516 — 50,751 50,751 
Venues— — 303,424 303,424 — — — 
Other business lines— — 22,029 22,029 — — — 
$401,259 $186,929 $325,453 $913,641 $209,943 $87,053 $296,996 
Operating and Reportable Segments
Six Months Ended June 30, 2021Six Months Ended June 30, 2020
Golf EquipmentApparel, Gear
& Other		TopgolfTotalGolf EquipmentApparel, Gear
& Other		Total
Major product category:
Golf Clubs$636,326 $— $— $636,326 $407,264 $— $407,264 
Golf Balls141,815 — — 141,815 94,340 — 94,340 
Apparel— 186,703 — 186,703 — 113,592 113,592 
Gear, Accessories & Other— 182,328 — 182,328 — 124,076 124,076 
Venues— — 388,594 388,594 — — — 
Other business lines— — 29,496 29,496 — — — 
$778,141 $369,031 $418,090 $1,565,262 $501,604 $237,668 $739,272 
The Topgolf segment included $3,221,000 and $4,195,000, respectively, in sales of golf clubs, golf balls, and apparel sales, which are reflected within product sales within the consolidated condensed statements of operations for the three and six months ended June 30, 2021.
The Apparel, Gear and Other and Topgolf segments include royalty income from licensing agreements of $22,240,000 and $33,108,000, respectively, for the three and six months ended June 30, 2021. For the three months and six months ended June 30,2020, the Company recognized royalty income of $3,552,000 and $9,097,000, respectively.
As of December 31, 2020, the Company's balance for deferred revenue was $2,546,000, which included deferred revenue from gift cards. In connection with the merger with Topgolf completed on March 8, 2021, the Company acquired deferred revenue related to event deposits, lifetime and premium memberships, prepaid sponsorships, virtual currency and game credits related to the WGT digital golf game, and gift cards. As of June 30, 2021, the Company’s deferred revenue balance was $83,580,000.
The Company recognized revenues of $97,232,000 and $125,278,000 related to the redemption and amortization of deferred revenue, including gift card breakage, during the three and six months ended June 30, 2021, respectively. The Company recognized revenues of $454,000 and $1,030,000 related to the redemption and breakage of gift cards during the three and six months ended June 30, 2020, respectively.
The following table summarizes revenue by geographical areas in which the Company operates (in thousands):
Three Months Ended
June 30,		Six Months Ended
June 30,
2021202020212020
Revenue by Major Geographic Region:
United States$642,757 $171,714 $1,030,979 $389,217 
Europe120,999 50,074 229,344 146,793 
Japan61,861 24,640 133,747 101,987 
Rest of World88,024 50,568 171,192 101,275 
$913,641 $296,996 $1,565,262 $739,272 
The Company sells its golf equipment products and apparel, gear and accessories in the United States and internationally, with its principal international regions being Japan and Europe. On a regional basis, sales of golf equipment are generally higher than sales of apparel gear and other in most regions other than Europe, which has a higher concentration of apparel, gear and other sales as a result of Jack Wolfskin, which is headquartered in Germany. Venues revenue is higher in the United States, as Topgolf has more domestic venues than international. Other business lines revenue is predominantly in the United States and Europe.
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. Sales returns are estimated based upon historical returns, current economic trends, changes in customer demands and sell-through of products. The Company also offers certain customers sales programs that allow for specific returns. The Company records a return liability as an offset to accounts receivable for anticipated returns related to these sales programs at the time of sale based on the terms of the sales program. The cost recovery of inventory associated with this reserve is accounted for in other current assets. The Company's provision for sales returns will fluctuate with the seasonality of the business, while actual sales returns are generally more heavily weighted toward the back half of the year as the golf season comes to an end. Historically, the Company’s actual sales returns have not been materially different from management’s original estimates.
The following table provides a reconciliation of the activity related to the Company’s sales return reserve (in thousands):
Three Months Ended
June 30,
 Six Months Ended
June 30,
2021202020212020
Beginning balance $60,784 $50,992 $43,986 $34,314 
Provision29,000 26,374 64,890 62,010 
Sales returns(18,192)(20,529)(37,284)(39,487)
Ending balance$71,592 $56,837 $71,592 $56,837