XML 19 R10.htm IDEA: XBRL DOCUMENT v3.20.2
Revenue Recognition
 9 Months Ended
Sep. 30, 2020
Revenue From Contract With Customer [Abstract]  
Revenue Recognition

(3) Revenue Recognition

The Company generates the majority of its revenues from advertisers for its performance based advertising services, which include the use of its call and text analytics and communications technologies, and previously, its pay-for-call advertising products and services. The Company’s revenue also previously consisted of payments from its reseller partners for use of its local leads platform and marketing services, which they offer to their small business customers. Customers typically receive the benefit of the Company’s services as they are performed and substantially all the Company’s revenue is recognized over time as the services are performed. For its text analytics and communications services, the Company primarily recognizes revenue ratably over the period of the applicable agreement as services are provided.

The Company adopted FASB ASC Topic 606, Revenue from Contracts with Customers, (ASC 606) on January 1, 2018 using the modified retrospective approach for all contracts not completed as of the date of initial application, referred to as open contracts. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company measures revenue based on the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service or product to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. 

The Company’s call analytics technology platform provides data and insights that can measure the performance of mobile, online and offline advertising for advertisers and small business resellers. The Company generates revenue from the Company’s call analytics technology platform when advertisers pay the Company a fee for each call/text or call/text related data element they receive from calls or texts and previously, this included call-based ads the Company distributed through its sources of call distribution or for each phone number tracked based on a pre-negotiated rate. Revenue was recognized as services are provided over time, which was generally measured by the delivery of each call/text or call/text related data element or each phone number tracked. The Company’s text analytics and communications services provides a text and messaging platform for use by customers to help enable improving their consumer’s experience and engagement. The Company primarily recognizes revenue ratably over the period of the applicable agreement as services are provided.

Prior to its divestiture, the Company’s call marketplace offered advertisers and advertising service providers’ ad placements across a distribution network. Advertisers or advertising service providers were charged on a pay-per-call or cost-per-action basis. The Company generated revenue upon delivery of qualified and reported phone calls to advertisers or advertising service providers’ listings. These advertisers and advertising service providers paid the Company a designated transaction fee for each qualified phone call, which occurred when a user made a phone call, clicked, or completed a specified action on any of their advertisement listings after it had been placed by the Company or by the Company’s distribution partners. The Company also generated revenue from cost-per-action services, which occurred when a user made a phone call from the Company’s advertiser’s listing or was redirected from one of the Company’s web sites or a third-party web site in the Company’s distribution network to an advertiser web site and completed the specified action. Each qualified phone call or specified action on a listing represented a completed transaction. Revenue was recognized as services were provided upon the delivery of a qualified phone call or completed action. The Company’s distribution network is primarily comprised of third party mobile and online search engines and applications, mobile carriers, directories, destination sites, shopping engines, Internet domains or web sites, other targeted Web-based content, and offline sources. Prior to the divestiture, the Company entered into agreements with these third-party distribution partners to provide distribution for pay-for-call advertisement listings, which contained call tracking numbers and/or URL strings. The Company generally paid distribution partners based on a percentage of revenue or a fixed amount per phone call or other actions on these listings. The Company acted as the principal with the advertiser for revenue call transactions, and was responsible for the fulfillment of services. The Company recognized revenue for these fees under the gross revenue recognition method.

Prior to its divestiture, the Company’s local leads platform allowed reseller partners to sell call advertising, search marketing, and other lead generation products through their existing sales channels to small business advertisers. The Company generated revenue from reseller partners utilizing the Company’s local leads platform and was paid account fees and/or agency fees for the Company’s products in the form of a percentage of the cost of every call or click delivered to advertisers. Revenue was recognized over time as services were provided. The reseller partners engaged the advertisers and were the principal for the transaction, and the Company, in certain instances, was only financially liable to the publishers in the Company’s capacity as a collection agency for the amount collected from the advertisers. The Company recognized revenue for these fees under the net revenue recognition method. In limited arrangements resellers paid the Company a fee for fulfilling an advertiser’s campaign in its distribution network and the Company acted as the principal and recognized revenue for these fees under the gross revenue recognition method.

For the three and nine months ended September 30, 2019, revenues disaggregated by service type were $23.8 million and $74.3 million for performance based advertising services, respectively, and $956,000 and $3.3 million for local leads services, respectively. For the three and nine months ended September 30, 2020, revenues disaggregated by service type were $25.8 million and $75.0 million for performance based advertising services, respectively, and $645,000 and $2.1 million for local leads services, respectively.

The majority of the Company’s customers are invoiced on a monthly basis following the month of the delivery of services and are required to make payments under standard credit terms. The Company establishes an allowance for advertiser credits, which is included in accrued expenses and other current liabilities in the balance sheet as of September 30, 2020, using its best estimate of the amount of expected future reductions in advertisers’ payment obligations related to delivered services based on analysis of historical credits. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. The balance associated with the allowance for advertiser credits in the Company’s consolidated balance sheet was $346,000 and $370,000 as of December 31, 2018 and 2019, respectively, and was $280,000 as of September 30, 2020. Customer payments received in advance of revenue recognition are contract liabilities and are recorded as deferred revenue. The deferred revenue balance in the Company’s consolidated balance sheet as of December 31, 2018 and 2019, was $1.8 million and $1.2 million, respectively, and was $1.5 million as of September 30, 2020. During the three and nine months ended September 30, 2020, revenue recognized that was included in the contract liabilities balance at the beginning of the period was $166,000 and $974,000, respectively. During the three and nine months ended September 30, 2019, revenue recognized that was included in the contract liabilities balance at the beginning of the period was $367,000 and $1.2 million.  

The majority of the Company’s total revenue is derived from contracts that include consideration that is variable in nature. The variable elements of these contracts primarily include the number of transactions (for example, the number qualified phone calls). For contracts with an effective term greater than one year, the Company applies the standard’s practical expedient that permits the exclusion of disclosure of the value of unsatisfied performance obligations for these contracts as the Company’s right to consideration corresponds directly to the value provided to the customer for services completed to date and all future variable consideration is allocated to wholly unsatisfied performance obligations. A term for purposes of these contracts has been estimated at 24 months. In addition, the Company applies the standard’s optional exemption to disclose information about performance obligations for contracts that have original expected terms of one year or less.

For arrangements that include multiple performance obligations, the transaction price from the arrangement is allocated to each respective performance obligation based on its relative standalone selling price and recognized when revenue recognition criteria for each performance obligation are met. The standalone selling price for each performance obligation is established based on the sales price at which the Company would sell a promised good or service separately to a customer or the estimated standalone selling price.

In certain cases, the Company recorded revenue based on available and reported preliminary information from third parties. Collection on the related receivables may vary from reported information based upon third-party refinement of the estimated and reported amounts owed that occurs subsequent to period ends.

The Company’s incremental direct costs of obtaining a contract, which consist primarily of sales commissions, are generally deferred and amortized to sales and marketing expense over the estimated life of the relevant customer relationship of approximately 24 months and are subject to being monitored every period to reflect any significant change in assumptions. In addition, the deferred contract cost asset is assessed for impairment on a periodic basis. The Company’s contract acquisition costs are included in other assets, net in the balance sheet. The Company is applying the standard’s practical expedient permitting expensing of costs to obtain a contract when the expected amortization period is one year or less, which typically results in expensing commissions paid to acquire certain contracts. As of December 31, 2019 and September 30, 2020, the Company had $287,000 and $216,000 of net deferred contract costs, respectively, and the amortization associated with these costs was $72,000 and $229,000 for the three and nine months ended September 30, 2020, respectively.