Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited condensed consolidated balance sheets for the fiscal year beginning January 1, 2018 as an adjustment to the opening balances:



	As of		Adjustments			As of
	December 31, 2017		Adjustments			January 1, 2018
	(In thousands)
Assets:
Accounts receivable, net	$	412,798	$	6,113		$	418,911
Inventories	$	245,894	$	(2,368	)	$	243,526
Other non-current assets	$	61,789	$	4,344		$	66,133
Liabilities:
Accounts payable	$	111,915	$	(156	)	$	111,759
Other accrued liabilities	$	222,470	$	45,481		$	267,951
Deferred revenue	$	55,284	$	(25,181	)	$	30,103
Income taxes payable	$	7,015	$	724		$	7,739
Other non-current liabilities	$	22,099	$	(276	)	$	21,823
Stockholders’ equity:
Retained earnings	$	128,168	$	(12,503	)	$	115,665

The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited condensed consolidated balance sheets as of September 30, 2018:



	As of September 30, 2018
	As reported		Adjustments			Balance without adoption of ASC 606
	(In thousands)
Assets
Accounts receivable, net	$	358,982	$	(13,147	)	$	345,835
Inventories	$	330,516	$	2,491		$	333,007
Other non-current assets	$	94,047	$	(3,573	)	$	90,474
Liabilities:
Accounts payable	$	168,155	$	110		$	168,265
Other accrued liabilities	$	282,410	$	(53,196	)	$	229,214
Deferred revenue	$	35,485	$	18,326		$	53,811
Income taxes payable	$	6,853	$	1,554		$	8,407
Other non-current liabilities	$	53,499	$	1,884		$	55,383
Stockholders’ equity:
Retained earnings	$	124,488	$	16,761		$	141,249
Non-controlling interest	$	24,301	$	332		$	24,633

The following tables summarize the impacts of adopting ASC 606 on the Company’s unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2018:



	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018
	As reported			Adjustments			Balance without adoption of ASC 606			As reported			Adjustments			Balance without adoption of ASC 606
	(In thousands)									(In thousands)
Net revenue	$	400,586		$	2,278		$	402,864		$	1,112,379		$	5,974		$	1,118,353
Cost of revenue	$	276,394		$	(569	)	$	275,825		$	774,510		$	(123	)	$	774,387
Gross profit	$	124,192		$	2,847		$	127,039		$	337,869		$	6,097		$	343,966
Provision for income taxes	$	2,780		$	744		$	3,524		$	9,541		$	1,507		$	11,048
Net income	$	9,150		$	2,103		$	11,253		$	9,510		$	4,590		$	14,100
Net Income (loss) attributable to non-controlling interest	$	(799	)	$	332		$	(467	)	$	(799	)	$	332		$	(467	)
Net income attributable to NETGEAR, Inc.	$	9,949		$	1,771		$	11,720		$	10,309		$	4,258		$	14,567

Schedule of Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2018:



		1 year		2 years		Greater than 2 years		Total
	(In thousands)
Performance obligations		$	109,309	$	13,334	$	8,956	$	131,599

Schedule of Changes in Contract Balances

The following table reflects the changes in contract balances for the nine months ended September 30, 2018:



	Balance Sheet Location	September 30, 2018		January 1, 2018 ^(*)		$ change			% change
		(In thousands)
Accounts receivable, net	Accounts receivable, net	$	358,982	$	418,911	$	(59,929	)	(14.3	)%
Contract liabilities - current	Deferred revenue	$	35,485	$	30,103	$	5,382		17.9	%
Contract liabilities - non-current	Other non-current liabilities	$	20,148	$	13,839	$	6,309		45.6	%

_________________________

* Includes the adjustments made to the contracts which were not completed at the date of ASC 606 adoption using the modified retrospective method.

Schedule of Net Revenue Disaggregated by Geographical Region and Sales Channel

In the following tables, 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 tables also include reconciliations of the disaggregated revenue by reportable segment. The Company operates and reports in three segments: Arlo, Connected Home, and Small and Medium Business ("SMB"). Sales and usage-based taxes are excluded from net revenue.



	Three Months Ended
	September 30, 2018								October 1, 2017^(*)
	Arlo		Connected Home		SMB		Total		Arlo		Connected Home		SMB		Total
	(In thousands)
Geographic regions:
Americas	$	112,851	$	141,884	$	34,049	$	288,784	$	88,134	$	129,034	$	27,220	$	244,388
EMEA	11,759		27,619		25,539		64,917		17,178		22,731		22,252		62,161
APAC	6,564		25,181		15,140		46,885		5,148		31,334		12,452		48,934
Total net revenue	$	131,174	$	194,684	$	74,728	$	400,586	$	110,460	$	183,099	$	61,924	$	355,483
Sales channels:
Service provider	$	5,973	$	30,769	$	1,191	$	37,933	$	5,794	$	44,631	$	1,114	$	51,539
Non-service provider	125,201		163,915		73,537		362,653		104,666		138,468		60,810		303,944
Total net revenue	$	131,174	$	194,684	$	74,728	$	400,586	$	110,460	$	183,099	$	61,924	$	355,483

_________________________

* As noted above, prior period amounts have not been adjusted under the modified retrospective method.



	Nine Months Ended
	September 30, 2018								October 1, 2017^(*)
	Arlo		Connected Home		SMB		Total		Arlo		Connected Home		SMB		Total
	(In thousands)
Geographic regions:
Americas	$	264,728	$	422,759	$	94,743	$	782,230	$	197,291	$	396,912	$	88,763	$	682,966
EMEA	49,649		70,073		80,505		200,227		39,585		63,634		72,591		175,810
APAC	17,820		70,796		41,306		129,922		13,028		102,819		35,240		151,087
Total net revenue	$	332,197	$	563,628	$	216,554	$	1,112,379	$	249,904	$	563,365	$	196,594	$	1,009,863
Sales channels:
Service provider	$	21,951	$	118,899	$	2,954	$	143,804	$	15,743	$	146,309	$	2,492	$	164,544
Non-service provider	310,246		444,729		213,600		968,575		234,161		417,056		194,102		845,319
Total net revenue	$	332,197	$	563,628	$	216,554	$	1,112,379	$	249,904	$	563,365	$	196,594	$	1,009,863

_________________________

* As noted above, prior period amounts have not been adjusted under the modified retrospective method.