Revenue Recognition

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 2. Revenue Recognition

Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

Transaction Price Allocated to the Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods for which customer purchase orders have been accepted, that are scheduled or in the process of being scheduled for shipment, and that are not yet invoiced.

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of December 31, 2022:

(In thousands)	2023		2024		Beyond 2024		Total
Performance obligations	$	95,816	$	2,033	$	1,898	$	99,747

Contract Costs

Costs to fulfill a contract are capitalized when they relate directly to an existing contract or specific anticipated contract, generate or enhance resources that will be used to fulfill performance obligations and are recoverable. These costs include direct cost incurred at inception of a contract which enables the fulfillment of the performance obligation

and totaled $5.3 million and $3.8 million as of December 31, 2022 and 2021, respectively. There was no impairment of capitalized contract costs during the years ended December 31, 2022, 2021 and 2020.

Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in Sales and marketing and General and administrative expenses. If the incremental direct costs of obtaining a contract, which consist of sales commissions, relate to a service recognized over a period longer than one year, costs are deferred and amortized in line with the related services over the period of benefit. Deferred commissions are classified as non-current based on the original amortization period of over one year. As of December 31, 2022 and 2021, deferred commissions were not significant.

Contract Balances

The Company records accounts receivable when it has an unconditional right to consideration. Contract liabilities are recorded when cash payments are received or due in advance of performance. Contract liabilities consist of advance payments and deferred revenue, where the Company has unsatisfied performance obligations. Contract liabilities are mainly classified as Deferred revenue on the consolidated balance sheets.

Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer.

The following table reflects the contract balances:

(In thousands)	Balance Sheet Location	December 31, 2022		December 31, 2021
Accounts receivable, net	Accounts receivable, net	$	277,485	$	261,158
Contract liabilities - current	Deferred revenue	$	21,128	$	16,500
Contract liabilities - non-current	Other non-current liabilities	$	3,897	$	3,100

The difference in the balances of the Company’s contract assets and liabilities as of December 31, 2022 and 2021 primarily results from the timing difference between the Company’s performance and the customer’s payment.

During the years ended December 31, 2022, 2021 and 2020, $38.5 million, $31.9 million and $25.0 million, respectively, of revenue were deferred due to unsatisfied performance obligations for service contracts and undelivered product commitments, $33.1 million, $28.9 million and $16.9 million, respectively, of revenue were recognized for the satisfaction of performance obligations, and $16.9 million, $13.6 million and $6.5 million, respectively, of this recognized revenue were included in the contract liability balance at the beginning of the period, respectively.

There were no significant changes in estimates during the periods that would affect the contract balances.

Disaggregation of Revenue

In the following table, net revenue is disaggregated by geographic region and sales channel. The Company conducts business across three geographic regions: Americas; Europe, Middle East, and Africa (“EMEA”); and Asia Pacific (“APAC”). The table also includes reconciliations of the disaggregated revenue by reportable segment. The Company operates and reports in two segments: Connected Home, and Small and Medium Business (“SMB”). Sales and usage-based taxes are excluded from net revenue.

	Year Ended December 31,
	2022						2021						2020
(In thousands)	Connected Home		SMB		Total		Connected Home		SMB		Total		Connected Home		SMB		Total
Geographic regions (1):
Americas	$	443,612	$	173,599	$	617,211	$	651,936	$	134,390	$	786,326	$	788,402	$	109,569	$	897,971
EMEA		49,732		129,626		179,358		112,368		117,461		229,829		129,929		91,736		221,665
APAC		65,479		70,424		135,903		89,168		62,750		151,918		89,214		46,352		135,566
Total	$	558,823	$	373,649	$	932,472	$	853,472	$	314,601	$	1,168,073	$	1,007,545	$	247,657	$	1,255,202
Sales channels:
Service provider	$	148,331	$	4,234	$	152,565	$	129,052	$	2,481	$	131,533	$	192,714	$	3,150	$	195,864
Non-service provider		410,492		369,415		779,907		724,420		312,120		1,036,540		814,831		244,507		1,059,338
Total	$	558,823	$	373,649	$	932,472	$	853,472	$	314,601	$	1,168,073	$	1,007,545	$	247,657	$	1,255,202