MANNATECH INCMTEX
MANNATECH INC Revenue Disclosure
Revenue Recognition
The Company’s revenue is derived from sales of individual products and associate fees or, in certain geographic markets, starter packs. Substantially all of the Company’s product sales are made at published wholesale prices to associates and preferred customers. The Company records revenue net of any sales taxes and records a reserve for expected sales returns based on its historical experience. During the third quarter of 2024, the Company changed its shipping terms with customers such that ownership transfers upon delivery to the freight carrier, satisfying the Company's performance obligation. Previously, the Company's shipping terms were Free on Board destination, so the Company recognized revenue upon delivery of the product to the customer. The Company's deferred revenue balances related to product orders in transit were $0 at December 31, 2024 and $1.4 million at December 31, 2023. The Company's remaining performance obligations related to associate fees were $0.1 million at both December 31, 2024 and 2023. These amounts are included in Deferred Revenue on the accompanying Consolidated Balance Sheets.
Orders placed by associates or preferred customers constitute our contracts with customers. Product sales placed in the form of an automatic order contain two performance obligations: (a) the sale of the product and (b) the loyalty program. The Company's customer loyalty program conveys a material right to the customer to redeem loyalty points for the purchase of products. For these contracts, the Company accounts for each of these obligations separately as they are each distinct. The transaction price is allocated between the product sale and the loyalty program on a relative standalone selling price basis. Sales placed through a one-time order contain only the first performance obligation noted above - the delivery of the product. Payments are made immediately through credit card upon purchase of the products.
The Company provides associates with access to a complimentary three-month package for the Success TrackerTM and Mannatech+ online business tools with the first payment of an associate fee. The first payment of an associate fee contains three performance obligations: (a) the associate fee, whereby the Company provides an associate with the right to earn commissions, bonuses and incentives for a year, (b) three months of complimentary access to utilize the Success Tracker™ online tool and (c) three months of complimentary access to utilize the Mannatech+ online business tool. The transaction price is allocated between the three performance obligations on a relative standalone selling price basis and revenue is recognized over the period that access to the tool is active. Associates do not have complimentary access to online business tools after the first contractual period.
With regard to both of the aforementioned contracts, the Company determines the standalone selling prices by using observable inputs which includes the Company’s standard published price lists.
Our sales mix for the years ended December 31, was as follows (in millions, except percentages):
| 2024 | Percentage | 2023 | Percentage | ||||||||||||||||||||
| Product sales | $ | 112.3 | 95.2 | % | $ | 125.3 | 95.0 | % | |||||||||||||||
| Pack sales and associate fees | 4.1 | 3.5 | % | 5.6 | 4.2 | % | |||||||||||||||||
| Other | 1.5 | 1.3 | % | 1.1 | 0.8 | % | |||||||||||||||||
| Total consolidated net sales | $ | 117.9 | 100.0 | % | $ | 132.0 | 100.0 | % | |||||||||||||||
Deferred Commissions
The Company defers commissions on (i) the sales of products shipped but not received by customers by the end of the respective period (up to the change in shipping terms with the customers) and (ii) the loyalty program. Deferred commissions are incremental costs and are charged to expense when the related revenue is recognized. Deferred commissions were $1.3 million and $2.1 million at December 31, 2024 and 2023, respectively.
Deferred Revenue
The Company defers certain components of its revenue. Deferred revenue consisted of: (i) sales of products shipped but not received by the customers by the end of the respective period (up to the change in shipping terms with customers); (ii) revenue from the loyalty program; (iii) prepaid registration fees from customers planning to attend a future corporate-sponsored event; and (iv) prepaid annual associate fees. During the third quarter of 2024, the Company changed its shipping terms with customers such that ownership transfers upon delivery to the freight carrier. Previously, to defer product sales that had not been received by customers, the Company estimated order delivery dates using weighted averages of historical delivery data collected from its freight carriers. The Company's deferred revenue balances related to product sales that have not been received by customers was $0 at December 31, 2024. At December 31, 2024 and 2023, the Company’s deferred revenue was $3.0 million and $4.8 million, respectively. The deferred revenue amount of $3.0 million as of December 31, 2024 will be recognized as revenue for the year ending December 31, 2025. The deferred revenue amount of $4.8 million as of December 31, 2023 was recognized as revenue for the year ended December 31, 2024. The deferred revenue amount of $5.1 million as of December 31, 2022 was recognized as revenue for the year ended December 31, 2023.
The Company's customer loyalty program conveys a material right to the customer as it provides the promise to redeem loyalty points for the purchase of products, which is based on earning points through placing consecutive qualified orders. The Company factors in breakage rates, which is the percentage of the loyalty points that are expected to be forfeited or expire, for purposes of revenue recognition. Breakage rates are estimated based on historical data and can be reasonably and objectively determined. The deferred revenue associated with the loyalty program at December 31, 2024 and 2023 was $2.9 million and $3.2 million, respectively, as follows:
Loyalty program (in thousands) | 2024 | 2023 | ||||||
| Loyalty deferred revenue as of January 1, | $ | 3,242 | $ | 4,167 | ||||
| Loyalty points forfeited or expired | (2,921) | (4,042) | ||||||
| Loyalty points used | (9,193) | (9,416) | ||||||
| Loyalty points vested | 11,211 | 11,658 | ||||||
| Loyalty points unvested | 582 | 875 | ||||||
| Loyalty deferred revenue as of December 31, | $ | 2,921 | $ | 3,242 | ||||
Sales Refund and Allowances
The Company utilizes the expected value method to estimate the sales returns and allowance liability by taking the weighted average of the sales return rates over a rolling six-month period. The Company allocates the total amount recorded within the sales return and allowance liability as a reduction of the overall transaction price for the Company’s product sales. The Company deems the sales refund and allowance liability to be a variable consideration.
Historically, sales returns have not materially changed through the years, as the majority of our customers who return their merchandise do so within the first 90 days after the original sale. Sales returns have historically averaged 0.5% or less of our gross sales. At December 31, 2024 and 2023, our sales return reserve, which is a component of Accrued expenses, consisted of the following (in thousands):
| 2024 | 2023 | |||||||
| Sales returns reserve as of January 1, | $ | 41 | $ | 59 | ||||
| Provision in current period | 788 | 788 | ||||||
| Returns charged off against the reserve | (773) | (806) | ||||||
| Sales returns reserve as of December 31, | $ | 56 | $ | 41 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 26, 2025 | Showing above |
| 2023 | Mar 28, 2024 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.