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Revenue Recognition | 9 Months Ended
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Sep. 30, 2023
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. Product revenues include the sale of golf clubs, golf balls, lifestyle and outdoor apparel, gear and accessories, and golf apparel and accessories. We sell our products to customers, which include on- and off-course golf shops and national retail stores, and directly to consumers through our e-commerce business and at our apparel retail and venue locations. Our product revenue also includes royalty income from third parties from the licensing of certain soft goods products. Service revenues primarily include Topgolf venue sales of food and beverage, fees charged for gameplay, the sale of game credits to guests, franchise fees, the sale of gift cards, sponsorship contracts, leasing revenue, non-refundable deposits received for venue reservations, and from our online multiplayer digital golf games. Contracts with our customers for the purchase of our products are generally in the form of a purchase order. In certain cases, we enter into sales agreements which contain specific terms, discounts and allowances. We also enter into licensing agreements with certain distributors and, with respect to our Toptracer operations, driving ranges and hospitality and entertainment venues. The following table presents our revenue disaggregated by major category and operating and reportable segment (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Topgolf: |  |  |  |  |  |  |
Venues | $ | 430.5 |  |  | $ | 399.5 |  |  | $ | 1,270.4 |  |  | $ | 1,089.4 |
Other business lines | 17.2 |  |  | 14.3 |  |  | 51.6 |  |  | 50.1 |
Total Topgolf | $ | 447.7 |  |  | $ | 413.8 |  |  | $ | 1,322.0 |  |  | $ | 1,139.5 |
Golf Equipment: |  |  |  |  |  |  |
Golf clubs | $ | 222.2 |  |  | $ | 221.4 |  |  | $ | 913.3 |  |  | $ | 959.6 |
Golf balls | 71.2 |  |  | 75.3 |  |  | 274.8 |  |  | 257.0 |
Total Golf Equipment | $ | 293.4 |  |  | $ | 296.7 |  |  | $ | 1,188.1 |  |  | $ | 1,216.6 |
Active Lifestyle: |  |  |  |  |  |  |
Apparel | $ | 211.7 |  |  | $ | 181.4 |  |  | $ | 531.3 |  |  | $ | 456.7 |
Gear, accessories & other | 87.8 |  |  | 96.6 |  |  | 346.3 |  |  | 331.6 |
Total Active Lifestyle | $ | 299.5 |  |  | $ | 278.0 |  |  | $ | 877.6 |  |  | $ | 788.3 |
Total | $ | 1,040.6 |  |  | $ | 988.5 |  |  | $ | 3,387.7 |  |  | $ | 3,144.4 |
Venue product sales at our Topgolf operating segment include the sale of golf clubs, golf balls, apparel, gear and accessories. During the three and nine months ended September 30, 2023, venue product sales were $4.2 million and $12.5 million, respectively. During the three and nine months ended September 30, 2022, venue product sales were $4.5 million and $13.3 million, respectively. Product and Service Revenue We sell our Golf Equipment products and Active Lifestyle products in the United States and internationally, with our principal international regions being Europe and Asia. Golf Equipment product sales are generally higher than Active Lifestyle sales in most regions except for 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, in addition to certain regions within Europe. The following table summarizes our revenue by major geographic region (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Revenue by Major Geographic Region: |  |  |  |  |  |  |
United States | $ | 737.3 |  |  | $ | 684.8 |  |  | $ | 2,435.1 |  |  | $ | 2,194.7 |
Europe | 149.5 |  |  | 141.9 |  |  | 423.3 |  |  | 417.7 |
Asia | 130.7 |  |  | 138.7 |  |  | 419.1 |  |  | 432.6 |
Rest of world | 23.1 |  |  | 23.1 |  |  | 110.2 |  |  | 99.4 |
Total | $ | 1,040.6 |  |  | $ | 988.5 |  |  | $ | 3,387.7 |  |  | $ | 3,144.4 |
Licensing, Royalty and Other Revenue We have revenues related to licensing and royalties in our Topgolf and Active Lifestyle operating segments primarily related to operating and sales-type leasing agreements for Toptracer installations (see Note 3), licensing agreements for apparel and soft goods products, and licensing agreements at Topgolf related to Swing Suite. The following table summarizes these revenues by operating segment (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Topgolf | $ | 12.2 |  |  | $ | 9.0 |  |  | $ | 36.5 |  |  | $ | 33.2 |
Active Lifestyle | 6.0 |  |  | 6.2 |  |  | 20.9 |  |  | 20.2 |
Total | $ | 18.2 |  |  | $ | 15.2 |  |  | $ | 57.4 |  |  | $ | 53.4 |
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, loyalty points, memberships and prepaid sponsorships at Topgolf, 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. Revenue from gift cards is deferred and recognized when the cards are redeemed, which generally occurs within a twelve-month period from the date of purchase. Revenue from the event deposits, loyalty points, memberships, prepaid sponsorships, game credits, and virtual currency related to digital golf games 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 following table provides a reconciliation of activity related to our short-term deferred revenue balance for the periods presented (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Beginning Balance | $ | 98.5 |  |  | $ | 91.8 |  |  | $ | 94.9 |  |  | $ | 93.9 |
Deferral of revenue | 154.6 |  |  | 167.9 |  |  | 478.3 |  |  | 438.4 |
Revenue recognized | (150.7) |  |  | (160.1) |  |  | (457.5) |  |  | (427.9) |
Breakage | (5.4) |  |  | (4.7) |  |  | (18.5) |  |  | (13.4) |
Foreign currency translation and other | (0.1) |  |  | (0.5) |  |  | (0.3) |  |  | 3.4 |
Ending Balance | $ | 96.9 |  |  | $ | 94.4 |  |  | $ | 96.9 |  |  | $ | 94.4 |
As of September 30, 2023 and December 31, 2022, our long-term deferred revenue balance was $3.6 million and $3.2 million, respectively. For the three and nine months ended September 30, 2023, we recognized $8.2 million and $57.8 million, respectively, of revenue that was included in the deferred revenue balances at December 31, 2022. For the three and nine months ended September 30, 2022, we recognized $12.0 million and $59.2 million, respectively, of revenue that was included in the deferred revenue balances at December 31, 2021. Variable Consideration We recognize revenue based on the amount of consideration we expect to receive from customers for our products and services. The consideration is based on the sales price of our products and services adjusted for estimates of variable consideration, including 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 September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Beginning Balance | $ | 24.8 |  |  | $ | 35.2 |  |  | $ | 20.8 |  |  | $ | 23.3 |
Additions | 4.8 |  |  | 6.1 |  |  | 26.9 |  |  | 33.6 |
Credits issued | (11.7) |  |  | (6.6) |  |  | (28.3) |  |  | (19.8) |
Foreign currency translation and other | (0.4) |  |  | (1.3) |  |  | (1.9) |  |  | (3.7) |
Ending Balance | $ | 17.5 |  |  | $ | 33.4 |  |  | $ | 17.5 |  |  | $ | 33.4 |
We record 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. Our 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 our sales return reserve for the periods presented (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Beginning Balance | $ | 81.1 |  |  | $ | 77.6 |  |  | $ | 55.4 |  |  | $ | 47.4 |
Provision | 33.5 |  |  | 17.3 |  |  | 145.0 |  |  | 103.6 |
Sales returns | (31.9) |  |  | (23.5) |  |  | (117.7) |  |  | (79.6) |
Ending Balance | $ | 82.7 |  |  | $ | 71.4 |  |  | $ | 82.7 |  |  | $ | 71.4 |
The cost recovery of inventory associated with the sales return liability is accounted for in other current assets on our condensed consolidated balance sheet. As of September 30, 2023 and December 31, 2022, our balance for cost recovery was $37.3 million and $25.5 million, respectively.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org//606/tableOfContent + Details
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