Other Financial Information

3 Months Ended

Mar. 31, 2023

Other Financial Information [Abstract]

Other Financial Information

Note 5. Other Financial Information

Total Inventory

Total inventory consisted of the following (in millions):

	As of
	March 31, 2023		December 31, 2022
Production and service materials	$	548.8	$	479.6
Finished goods	239.9		163.3
Total inventory	$	788.7	$	642.9
Reported as:
Inventory	$	761.5	$	619.4
Other long-term assets	27.2		23.5
Total inventory	$	788.7	$	642.9

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in millions):

	As of
	March 31, 2023		December 31, 2022
Contract manufacturer deposits	$	425.3	$	434.7
Prepaid expenses	130.5		104.3
Other current assets	180.6		141.0
Total prepaid expenses and other current assets	$	736.4	$	680.0

Warranties

Changes during the three months ended March 31, 2023 in the Company’s warranty reserve as reported within other accrued liabilities in the Condensed Consolidated Balance Sheets were as follows (in millions):

Balance as of December 31, 2022	$	29.5
Provisions made during the period	7.6
Actual costs incurred during the period	(8.0)
Balance as of March 31, 2023	$	29.1

Deferred Revenue

Details of the Company's deferred revenue, as reported in the Condensed Consolidated Balance Sheets, were as follows (in millions):

	As of
	March 31, 2023		December 31, 2022
Deferred product revenue, net	$	95.8	$	108.8
Deferred service revenue, net	1,664.1		1,554.3
Total	$	1,759.9	$	1,663.1
Reported as:
Current	$	1,074.3	$	1,020.5
Long-term	685.6		642.6
Total	$	1,759.9	$	1,663.1

Revenue

See Note 10, Segments, for disaggregated revenue by customer solution, customer vertical, and geographic region.

Product revenue of $19.2 million included in deferred revenue at January 1, 2023 was recognized during the three months ended March 31, 2023. Service revenue of $315.2 million included in deferred revenue at January 1, 2023 was recognized during the three months ended March 31, 2023.

Remaining Performance Obligations

Remaining Performance Obligations ("RPO") are comprised mainly of deferred product and service revenue, and to a lesser extent, unbilled service revenue from non-cancellable contracts for which the Company has not invoiced and has an obligation to perform, and for which revenue has not yet been recognized in the financial statements. Our RPO does not include backlog.

The following table summarizes the breakdown of RPO as of March 31, 2023 and when the Company expects to recognize the amounts as revenue (in millions):

	Revenue Recognition Expected by Period
	Total		Less than 1 year		1-3 years		More than 3 years
Product	$	99.0	$	80.6	$	14.6	$	3.8
Service	1,672.5		1,005.4		507.2		159.9
Total	$	1,771.5	$	1,086.0	$	521.8	$	163.7

Deferred Contract Cost

We capitalize direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. We incur these costs in connection with both initial contracts and renewals. These costs are initially deferred, recorded as prepaid expenses and other current assets or other long-term assets, and are amortized over a period of benefit, which is typically over the term of the customer contracts or when product is delivered and revenue recognized. Commission expense is included in sales and marketing expenses in the accompanying Condensed Consolidated Statements of Operations.

Deferred contract cost was $48.6 million as of March 31, 2023. For the three months ended March 31, 2023, amortization expense for previously deferred commissions was $8.1 million, and there were no impairment charges recognized.

Other Expense, Net

Other expense, net, consisted of the following (in millions):

	Three Months Ended March 31,
	2023		2022
Interest income	$	9.5	$	2.6
Interest expense	(19.2)		(12.5)
Gain (loss) on investments, net	0.9		(3.3)
Other	0.2		0.3
Other expense, net	$	(8.6)	$	(12.9)