Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 178

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 18
Chunk 178
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 all decisions to extend credit to the customer under a separate agreement with the customer, owns all such receivables
from the customer, assumes all risk of collection, and has no recourse to the Company in the event the customer does not pay. The third-party
financing company pays the Company for the purchase price on behalf of the customer, less certain transaction fees. Accordingly, sales
generated through these programs are not reflected in the Company’s receivables once payment is received from the third-party financing
company. The transaction fee paid by the Company to the third-party financing company is recognized as a reduction of revenue. These transaction
fees for the years ended December 31, 2024, 2023 and 2022 were $0.8million, $1.0million, and $0.6million, respectively.

To the extent that the Company sells
its products on third-party platforms, the Company incurs incremental contract acquisition costs in the form of sales commissions paid
to the platforms. The commissions are generally determined based on the sales price and an agreed-upon commission rate. The Company elects
the practical expedient under Accounting Standards Update No. 2014-09 Revenue From Contracts with Customers (Topic 606)to recognize sales commission as an expense as incurred, as the amortization period of the asset that the Company otherwise would have
recognized is less than one year.

The Company offers e-commerce solutions
to its vendors and sellers through its Newegg Partner Services. Part of the services include third-party logistics (3PL), Shipped-by-Newegg
(SBN), shipping label service (SLS), staffing, and media services. The fees we earn from these arrangements are recognized when the services
are rendered. For 3PL, SBN, and SLS, the revenues are recognized upon the shipment of the product to its end consumer, and upon processing
of a returned item for the client. For staffing, revenues are recognized based on when an employee is dispatched to a client, hours are
accumulated by the dispatched employees’ timecard, or when a direct hire placement is made. For media services, revenues are recognized
when the applicable commercial or editorial creative content is delivered.

The Company has two types of contractual
liabilities: (1) amounts collected, or amounts invoiced and due, related to product sales where receipt of the product by the customer
has not yet occurred or revenue cannot be recognized. Such amounts are recorded in the consolidated balance sheets as deferred revenue