REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Refer to Note 13, Segment Information, for revenue summarized by reportable segment and category for the three and six months ended June 30, 2020 and 2019.

Contract Balances

A substantial majority of our deferred revenue relates to product sales for which revenue will be recognized as the products are delivered to customers, generally within one week following the balance sheet date. Our deferred revenue was $17.6 million and $18.0 million as of June 30, 2020 and December 31, 2019. The amount of revenue recognized for the six months ended June 30, 2020 that was included in the deferred revenue balance at the beginning of the period was $17.8 million.

Customer Credits

The following table summarizes the activity in the liability for customer credits for the six months ended June 30, 2020 (in thousands):


	Customer Credits
Balance as of December 31, 2019	$	13,764
Credits issued	98,768
Credits redeemed ⁽¹⁾	(59,583)
Breakage revenue recognized	(9,183)
Foreign currency translation	45
Balance as of June 30, 2020	$	43,811

(1)Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant or for merchandise inventory sold by us. When customer credits are redeemed for goods or services provided by a third-party merchant, service revenue is recognized on a net basis as the difference between the carrying amount of the customer credit liability derecognized and the amount due to the merchant for the related transaction. When customer credits are redeemed for merchandise inventory sold by us, product revenue is recognized on a gross basis equal to the amount of the customer credit liability derecognized. Customer credits are primarily used within one year of issuance.

Costs of Obtaining Contracts

Incremental costs to obtain contracts with third-party merchants, such as sales commissions, are deferred and recognized over the expected period of the merchant arrangement, generally from 12 to 18 months. Deferred contract acquisition costs are presented within the following line items of the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019 (in thousands):


	June 30, 2020		December 31, 2019
Prepaid expenses and other current assets	$	1,847	$	2,501
Other non-current assets	6,079		10,133

The amortization of deferred contract acquisition costs is classified within Selling, general and administrative expense in the condensed consolidated statements of operations. We amortized $4.0 million and $5.1 million of deferred contract acquisition costs during the three months ended June 30, 2020 and 2019, and $8.7 million and $10.5 million for the six months ended June 30, 2020 and 2019. We did not recognize any impairments in relation to the deferred contract acquisition costs during the three and six months ended June 30, 2020 and 2019.

Allowance for Expected Credit Losses on Accounts Receivable

We establish an allowance for expected credit losses on accounts receivables based on identifying the following customer risk characteristics: size, type of customer, and payment terms offered in the normal course of business. Receivables with similar risk characteristics are grouped into pools. For each pool, we consider the historical credit loss experience, current economic conditions, bankruptcy filings, published or estimated credit default rates, age of the receivable and any recoveries in assessing the lifetime expected credit losses.

The following table summarizes the activity in the allowance for expected credit losses on accounts receivables for the six months ended June 30, 2020 (in thousands):


	Allowance for Expected Credit Losses
Balance as of January 1, 2020	$	3,693
Change in Provision	6,869
Write-offs	(1,247)
Foreign currency translation	147
Balance as of June 30, 2020	$	9,462

Variable Consideration for Unredeemed Vouchers

For merchant agreements with redemption payment terms, the merchant is not paid its share of the sale price for a voucher sold through one of our online marketplaces until the customer redeems the related voucher. If the customer does not redeem a voucher with such merchant payment terms, we retain all of the gross billings for that voucher, rather than retaining only our net commission. We estimate the variable consideration from vouchers that will not ultimately be redeemed using our historical voucher redemption experience and recognize that amount as revenue at the time of sale. We only recognize amounts in variable consideration when we believe it is probable that a significant reversal of revenue will not occur in future periods, which requires us to make significant estimates of future redemptions. If actual redemptions differ from our estimates, the effects could be material to the condensed consolidated financial statements. As of June 30, 2020 and December 31, 2019, we constrained $22.2 million and $14.6 million in revenue from unredeemed vouchers that we may recognize in future periods when we determine it is probable that a significant amount of that revenue will not be subsequently reversed.