88/264 Premium Services sold through partners are recognized as revenue based on a per­subscriber rate in a negotiated partner agreement and may include minimum guarantees for the minimum amount that will be purchased from us. Under these arrangements, a Premium partner may bundle the Premium Service with its existing product offerings or offer the Premium Service as an add­on. We satisfy our performance obligation, and revenue from these services is recognized, on a straight­line basis over the subscription period. For partner agreements where the minimum guarantee is not met, revenue is constrained to the revenue amounts for the actual subscriptions sold in a given period. We therefore only recognize the associated revenue when it is highly probable that this will not result in a significant reversal of revenue when the uncertainty is resolved. We assess the facts and circumstances, including whether the partner is acting as a principal or agent, of all partner revenue arrangements and then recognizes revenues either gross or net. Premium partner services, whether recognized gross or net, have one material performance obligation being the delivery of our Premium Service. Ad­Supported Revenue We generate revenue for our Ad­Supported segment primarily through display, audio, and video advertising delivered through advertising impressions. We enter into arrangements with advertising agencies that purchase advertising on our platform on behalf of the agencies’ clients and directly with some large advertisers. These advertising arrangements are typically sold on a cost­per­thousand basis and are evidenced by an Insertion Order (“IO”) that specifies the terms of the arrangement such as the type of advertising product, pricing, insertion dates, and number of impressions in a stated period. Ad­Supported revenue is recognized upon delivery of impressions. IOs may include multiple performance obligations as they generally contain several different advertising products that each represent a separately identifiable promise within the contract. For such arrangements, we allocate Ad­Supported revenue to each performance obligation on a relative stand­alone selling price basis. We determine stand­alone selling prices based on the prices charged to customers. We also may offer cash rebates to advertising agencies based on the volume of advertising inventory purchased. These rebates are estimated based on historical data and projected spend and result in a reduction of revenue recognized. Additionally, we generate Ad­Supported revenue through arrangements with certain suppliers to distribute advertising inventory on their advertising exchange platforms for purchase on a cost­per­thousand basis. Ad­Supported revenue is recognized over time when impressions are delivered on the platform. Share­based Payments Our employees and members of our board of directors receive remuneration in the form of share­based payment transactions, whereby employees and directors render services in consideration for equity instruments. The fair value of a stock option is estimated on the grant date using the Black­Scholes option­pricing model. The fair value of an RSU or RSA is measured using the fair value of our ordinary shares on the date of the grant. Stock­based compensation expense is recognized, net of forfeitures, over the requisite service periods of the awards, which is generally less than five years. Our use of the Black­Scholes option­pricing model requires the input of highly subjective assumptions, including the fair value of our underlying ordinary shares, expected term of the option, expected volatility of the price of our ordinary shares, risk­free interest rates, and the expected dividend yield of our ordinary shares. The assumptions used in our option­pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock­based compensation expense could be materially different in the future. These assumptions and estimates are as follows: • Fair Value of Our Ordinary Shares. As our ordinary shares are not publicly traded, we estimate the fair value of our ordinary shares as discussed in “—Ordinary Share Valuations” below. 81