The Company’s subsidiaries have had, and will continue to have material future cash flows, including revenue and expenses, which are denominated in currencies other than the Company’s functional currency. The Company and all its subsidiaries designate the U.S. dollar as the functional currency. Changes in exchange rates between the Company’s functional currency and other currencies in which the Company transacts business will cause fluctuations in cash flow expectations and cash flow realized or settled. Accordingly, the Company uses derivatives to mitigate its business exposure to foreign exchange risk. The Company enters into foreign currency forward contracts in Australian dollars, British pounds, Euros, Canadian dollar, and Japanese yen to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses and existing assets and liabilities. The Company does not enter into derivatives transactions for trading or speculative purposes.

The Company’s foreign currency forward contracts do not contain any credit-risk-related contingent features. The Company is exposed to credit losses in the event of nonperformance by the counter-parties of its forward contracts. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any one counter-party. In addition, the derivative contracts typically mature in less than six months and the Company continuously evaluates the credit standing of its counter-party financial institutions. The counter-parties to these arrangements are large highly rated financial institutions and the Company does not consider non-performance a material risk.

The Company may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, materiality, accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange rates. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with the authoritative guidance for derivatives and hedging. The Company records all derivatives on the balance sheets at fair value. Cash flow hedge gains and losses are recorded in other comprehensive income ("OCI") until the hedged item is recognized in earnings. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in Other income (expense), net in the unaudited condensed consolidated statements of operations.



		As of					As of
Derivative Assets	Balance Sheet Location	June 30, 2019		December 31, 2018		Balance Sheet Location	June 30, 2019		December 31, 2018
		(In thousands)					(In thousands)
Derivative assets not designated as hedging instruments	Prepaid expenses and other current assets	$	554	$	784	Other accrued liabilities	$	330	$	331
Derivative assets designated as hedging instruments	Prepaid expenses and other current assets	41		2		Other accrued liabilities	—		37
Total		$	595	$	786		$	330	$	368

Refer to Note 14. Fair Value Measurements, in Notes to Unaudited Condensed Consolidated Financial Statements for detailed disclosures regarding fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures.

The Company has entered into master netting arrangements which allow net settlements under certain conditions. Although netting is permitted, it is currently the Company's policy and practice to record all derivative assets and liabilities on a gross basis on the unaudited condensed consolidated balance sheets.



As of June 30, 2019							Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets
As of June 30, 2019	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Condensed Consolidated Balance Sheets		Net Amounts Of Assets Presented on the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
	(In thousands)
Bank of America	$	67	$	—	$	67	$	(166	)	$	—	$	(99	)
Wells Fargo	528		—		528		(164		)	—		364
Total	$	595	$	—	$	595	$	(330	)	$	—	$	265



As of December 31, 2018							Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets
As of December 31, 2018	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Condensed Consolidated Balance Sheets		Net Amounts Of Assets Presented on the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
	(In thousands)
Bank of America	$	323	$	—	$	323	$	(64	)	$	—	$	259
Wells Fargo	463		—		463		(298		)	—		165
Total	$	786	$	—	$	786	$	(362	)	$	—	$	424



As of June 30, 2019							Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets
As of June 30, 2019	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Condensed Consolidated Balance Sheets		Net Amounts Of Liabilities Presented on the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
	(In thousands)
Bank of America	$	166	$	—	$	166	$	(166	)	$	—	$	—
Wells Fargo	164		—		164		(164		)	—		—
Total	$	330	$	—	$	330	$	(330	)	$	—	$	—



As of December 31, 2018							Gross Amounts Not Offset on the Condensed Consolidated Balance Sheets
As of December 31, 2018	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Condensed Consolidated Balance Sheets		Net Amounts Of Liabilities Presented on the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
	(In thousands)
J.P. Morgan Chase	$	6	$	—	$	6	$	—		$	—	$	6
Bank of America	64		—		64		(64		)	—		—
Wells Fargo	298		—		298		(298		)	—		—
Total	$	368	$	—	$	368	$	(362	)	$	—	$	6

To help manage the exposure of operating margins to fluctuations in foreign currency exchange rates, the Company hedges a portion of its anticipated foreign currency revenue, costs of revenue and certain operating expenses. These hedges are designated at the inception of the hedge relationship as cash flow hedges under the authoritative guidance for derivatives and hedging. Effectiveness is tested at least quarterly both prospectively and retrospectively using regression analysis to ensure that the hedge relationship has been effective and is likely to remain effective in the future. The Company typically hedges portions of its anticipated foreign currency exposure less than six months. The Company enters into about ten forward contracts per quarter with an average size of approximately $6.0 million USD equivalent related to its cash flow hedging program.



	Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges
	Three Months Ended June 30, 2019
	Net revenue		Cost of revenue			Research and development			Sales and marketing			General and administrative
	(In thousands)
Statement of operations	$	230,852	$	165,407		$	18,814		$	34,541		$	10,463
Gains (losses) on cash flow hedge	$	672	$	(6	)	$	(20	)	$	(98	)	$	(12	)



	Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges
	Three Months Ended July 1, 2018
	Net revenue		Cost of revenue			Research and development			Sales and marketing			General and administrative
	(In thousands)
Statement of operations	$	255,276	$	174,996		$	21,946		$	38,552		$	18,458
Gains (losses) on cash flow hedge	$	1,187	$	(7	)	$	(13	)	$	(157	)	$	(50	)



	Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges
	Six Months Ended June 30, 2019
	Net revenue		Cost of revenue			Research and development			Sales and marketing			General and administrative
	(In thousands)
Statement of operations	$	479,934	$	332,481		$	37,646		$	70,396		$	23,580
Gains (losses) on cash flow hedge	$	1,086	$	(8	)	$	(46	)	$	(167	)	$	(23	)



	Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges
	Six Months Ended July 1, 2018
	Net revenue			Cost of revenue			Research and development		Sales and marketing		General and administrative
	(In thousands)
Statement of operations	$	500,477		$	343,878		$	43,137	$	76,426	$	34,219
Gains (losses) on cash flow hedge	$	(515	)	$	(1	)	$	86	$	73	$	(9	)

The Company expects to reclassify to earnings all of the amounts recorded in OCI associated with its cash flow hedges over the next twelve months. OCI associated with cash flow hedges of foreign currency revenue is recognized as a component of net revenue in the same period the related revenue is recognized. OCI associated with cash flow hedges of foreign currency costs of revenue and operating expenses are recognized as a component of cost of revenue and operating expenses in the same period and in the same statement of operations line item as the related costs of revenue and operating expenses are recognized.

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur within the designated hedge period or if not recognized within 60 days following the end of the hedge period. Deferred gains and losses in OCI with such derivative instruments are reclassified immediately into earnings through Other income (expense), net. Any subsequent changes in fair value of such derivative instruments also are reflected in current earnings unless they are re-designated as hedges of other transactions. The Company did not recognize any material net gains or losses related to the loss of hedge designation as there were no discontinued cash flow hedges during the six months ended June 30, 2019 and July 1, 2018.



Derivatives Designated as Hedging Instruments	Gains (Losses) Recognized in OCI - Effective Portion				Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion	Gains (Losses) Reclassified from OCI into Income - Effective Portion⁽¹⁾
	Three Months Ended					Three Months Ended
	June 30, 2019		July 1, 2018			June 30, 2019			July 1, 2018
	(In thousands)					(In thousands)
Cash flow hedges:
Foreign currency forward contracts	$	534	$	1,084	Net revenue	$	672		$	1,187
Foreign currency forward contracts	—		—		Cost of revenue	(6		)	(7		)
Foreign currency forward contracts	—		—		Research and development	(20		)	(13		)
Foreign currency forward contracts	—		—		Sales and marketing	(98		)	(157		)
Foreign currency forward contracts	—		—		General and administrative	(12		)	(50		)
Total	$	534	$	1,084		$	536		$	960

_________________________



Derivatives Designated as Hedging Instruments	Gains (Losses) Recognized in OCI - Effective Portion				Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion	Gains (Losses) Reclassified from OCI into Income - Effective Portion⁽¹⁾
	Six Months Ended					Six Months Ended
	June 30, 2019		July 1, 2018			June 30, 2019			July 1, 2018
	(In thousands)					(In thousands)
Cash flow hedges:
Foreign currency forward contracts	$	863	$	450	Net revenue	$	1,086		$	(515	)
Foreign currency forward contracts	—		—		Cost of revenue	(8		)	(1		)
Foreign currency forward contracts	—		—		Research and development	(46		)	86
Foreign currency forward contracts	—		—		Sales and marketing	(167		)	73
Foreign currency forward contracts	—		—		General and administrative	(23		)	(9		)
Total	$	863	$	450		$	842		$	(366	)

_________________________

The Company enters into non-designated hedges under the authoritative guidance for derivatives and hedging to manage the exposure of non-functional currency monetary assets and liabilities held on its financial statements to fluctuations in foreign currency exchange rates, as well as to reduce volatility in other income and expense. The non-designated hedges are generally expected to offset the changes in value of its net non-functional currency asset and liability position resulting from foreign exchange rate fluctuations. Foreign currency denominated accounts receivable and payable are hedged with non-designated hedges when the related anticipated foreign revenue and expenses are recognized in the Company’s financial statements. The Company also hedges certain non-functional currency monetary assets and liabilities that may not be incorporated into the cash flow hedge program. The Company adjusts its non-designated hedges monthly and enters into about ten non-designated derivatives per quarter. The average size of its non-designated hedges is approximately $2.0 million USD equivalent and these hedges range from one to three months in duration.



Derivatives Not Designated as Hedging Instruments	Location of Gains (Losses) Recognized in Income on Derivative	Three Months Ended				Six Months Ended
Derivatives Not Designated as Hedging Instruments		June 30, 2019		July 1, 2018		June 30, 2019		July 1, 2018
		(In thousands)
Foreign currency forward contracts	Other income (expense), net	$	304	$	3,794	$	906	$	1,939