Stamps.com 2015 Annual Report Download - page 69
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STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
futurenetcashflowsexpectedtobegeneratedbytheasset.Ifsuchassetsareconsideredtobeimpaired,theimpairmenttobe
recognizedismeasuredbytheamountbywhichthecarryingamountoftheassetsexceedsthefairvalueoftheassets.Assetstobe
disposedofarereportedatthelowerofthecarryingamountorfairvaluelesscoststosell.
Intangibleassetsthathaveindefiniteusefullivesarenotamortizedbut,instead,testedatleastannuallyforimpairmentwhile
intangibleassetsthathavefiniteusefullivescontinuetobeamortizedovertheirrespectiveusefullives.
Deferred Revenue
OurdeferredrevenuerelatesmainlytoservicerevenueandPhotoStampsretailboxes.Deferredrevenuerelatedtoourservice
revenuegenerallyarisesduetothetimingofpaymentversustheprovisionofservicesforcertaincustomersbilledinadvance.Wesell
ourPhotoStampsretailboxestoourcustomersthroughourwebsiteandselectedthirdparties.Proceedsfromthesaleofour
PhotoStampsretailboxesareinitiallyrecordedasaliabilitywhenreceived.WerecordtheliabilityforoutstandingPhotoStampsretail
boxesindeferredrevenue.
Revenue Recognition
Werecognizerevenuefromproductsalesorservicesrendered,aswellascommissionsfromadvertisingorsaleofproductsby
thirdpartyvendorstoourcustomerbasewhenthefollowingfourrevenuerecognitioncriteriaaremet:persuasiveevidenceofan
arrangementexists,deliveryhasoccurredorserviceshavebeenrendered,thesellingpriceisfixedordeterminable,andcollectabilityis
reasonablyassured.
ServicerevenueisprimarilyderivedfrommonthlyservicefeesandtransactionrelatedrevenuesfromourUSPSmailingand
shippingservices,ourmulti-carriershippingservicesandourmailingandshippingintegrations,andisrecognizedintheperiodthat
servicesareprovided.Productsales,netofreturnallowances,arerecordedwhentheproductsareshippedandtitlepassestocustomers.
Salesofitems,includingcustomizedpostage,soldtocustomersaremadepursuanttoasalescontractthatprovidesfortransferofboth
titleandriskoflossuponourdeliverytothecarrier.Returnallowancesforexpectedproductreturns,whichreduceproductrevenue,are
estimatedusinghistoricalexperience.Commissionsfromtheadvertisingorsaleofproductsbyathirdpartyvendortoourcustomer
basearerecognizedwhentherevenueisearnedandcollectionisdeemedprobable.
Customerspurchasepostagethroughourmailingandshippingsolutions.Ifthepostagepurchasefundsaretransferreddirectly
fromthecustomerstotheUSPS,wedonotrecognizerevenueforthispostage,asitispurchasedbyourcustomersdirectlyfromthe
USPS.
Customizedpostagerevenue,whichincludesthefacevalueofpostage,fromthesaleofPhotoStampsandPictureItPostagesheets
androllsismadepursuanttoasalescontractthatprovidesfortransferofbothtitleandriskoflossuponourdeliverytothecarrier.
SaleofPhotoStampsretailboxesareinitiallyrecordedasdeferredrevenue.PhotoStampsrevenuerelatedtothesaleofthese
PhotoStampsretailboxesissubsequentlyrecognizedwheneither:1)thePhotoStampsretailboxisredeemed,or2)thelikelihoodofthe
PhotoStampsretailboxbeingredeemedisdeemedremote(“breakage”)andthereisnolegalobligationtoremitthevalueofthe
unredeemedPhotoStampsretailboxes.
Onalimitedbasis,weallowthirdpartiestoofferproductsandpromotionstoourcustomerbase.Thesearrangementsgenerally
providepaymentintheformofaflatfeeorrevenuesharingarrangementswherewereceivepaymentuponcustomersaccessingthird
partyproductsandservices.Totalrevenuefromsuchadvertisingarrangementswasnotsignificantduring2015,2014and2013.
Weprovideourcustomerswiththeopportunitytopurchaseparcelinsurancedirectlythroughoursolutions.Insurancerevenue
representsthegrossamountchargedtothecustomerforpurchasinginsuranceandtherelatedcostrepresentstheamountpaidtoour
insurancebrokers.Werecognizerevenueoninsurancepurchasesupontheshipdateoftheinsuredpackage.
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