Balance Sheet Components

3 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

5. Balance Sheet Components

Accounts receivable, net of allowances

Accounts receivable, net of allowances, consist of the following:


	December 31, 2022			October 1, 2022
(In thousands)
Accounts receivable	$	141,587		$	127,523
Allowance for credit losses		(3,129	)		(2,744	)
Allowance for sales incentives		(28,755	)		(23,573	)
Accounts receivable, net of allowances	$	109,703		$	101,206

Inventories

Inventories, net, consist of the following:


	December 31, 2022		October 1, 2022
(In thousands)
Finished goods	$	260,734	$	406,657
Component parts		45,322		47,631
Inventories	$	306,056	$	454,288

The Company writes down inventory as a result of excess and obsolete inventories or when it believes that the net realizable value of inventories is less than the carrying value. As of December 31, 2022, and October 1, 2022, inventory write-downs were $15.2 million and $8.8 million, respectively.

Goodwill

The following table presents the changes in carrying amount of goodwill during the three months ended December 31, 2022:


(In thousands)
Balance as of October 1, 2022	$	77,300
Effect of exchange rate changes on goodwill		3,641
Balance as of December 31, 2022	$	80,941

Intangible assets

The following table reflects the changes in the net carrying amount of the components of intangible assets associated with the Company's acquisition activity:


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Impact of FX			Net Carrying Value		Weighted-Average Remaining Life
(In thousands, except weighted-average remaining life)
Trade name	$	451	$	(52	)	$	(7	)	$	392		5.25
Technology-based		31,480		(7,167	)		—			24,313		5.36
Total finite-lived intangible assets		31,931		(7,219	)		(7	)		24,705		5.36
In-process research and development not subject to amortization		71,759		—			(1,119	)		70,640
Total intangible assets	$	103,690	$	(7,219	)	$	(1,126	)	$	95,345

The following table summarizes the estimated future amortization expense of the Company's intangible assets as of December 31, 2022:


Fiscal years ending	Future Amortization Expense
(In thousands)
Remainder of fiscal 2023	$	4,478
2024		5,970
2025		3,369
2026		3,040
2027		3,025
2028 and there after		4,823
Total future amortization expense	$	24,705

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are hosted by a third-party vendor. Implementation costs incurred during the application development stage are capitalized until the software is ready for its intended use. The costs are then amortized on a straight-line basis over the term of the associated hosting arrangement and are recognized as an operating expense within the condensed consolidated statements of operations and comprehensive income. Beginning in fiscal 2020, and continuing through April 2022, the Company conducted activities to replace its legacy enterprise resource management system in order to accommodate the Company's expanding operations. In May 2022, the Company went live with its implementation of a new enterprise resource planning ("ERP") system. Capitalized costs, net of accumulated amortization, were $20.7 million and $21.7 million as of December 31, 2022, and October 1, 2022, respectively, and are reported as a component of other noncurrent assets on the Company's condensed consolidated balance sheets. Amortization expenses for implementation costs for cloud-based computing arrangements for three months ended December 31, 2022 were $1.0 million. Accumulated amortization was $3.5 million and $2.5 million as of December 31, 2022, and October 1, 2022, respectively.

Accrued expenses

Accrued expenses consisted of the following:


	December 31, 2022		October 1, 2022
(In thousands)
Accrued taxes	$	52,729	$	7,081
Accrued inventory and supply chain costs		44,895		51,011
Accrued general and administrative expenses		21,124		21,634
Accrued advertising and marketing		12,893		21,292
Accrued product development		6,392		8,168
Other accrued payables		311		104
Total accrued expenses	$	138,344	$	109,290

Deferred revenue

Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the condensed consolidated balance sheets. Deferred revenue primarily relates to revenue allocated to unspecified software upgrades and cloud-based services. Recognition of revenue as of December 31, 2022, includes $9.2 million of deferred revenue from the fourth quarter of fiscal 2022, related to newly launched products sold to resellers not recognized as revenue until the date of general availability was reached, which was the first quarter of fiscal 2023. Recognition of revenue as of January 1, 2022, includes $18.8 million of deferred revenue from the fourth quarter of fiscal 2021, related to newly launched products sold to resellers not recognized as revenue until the date of general availability was reached, which was the first quarter of fiscal 2022.

The following table presents the changes in the Company’s deferred revenue for the three months ended December 31, 2022, and January 1, 2022:


	December 31, 2022			January 1, 2022
(In thousands)
Deferred revenue, beginning of period	$	83,470		$	89,498
Recognition of revenue included in beginning of period deferred revenue		(11,520	)		(23,721	)
Revenue deferred, net of revenue recognized on contracts in the respective period		10,031			9,801
Deferred revenue, end of period	$	81,981		$	75,578

The Company expects the following recognition of deferred revenue as of December 31, 2022:


	For the fiscal years ending
	2023		2024		2025		2026		2027 and Beyond		Total
(In thousands)
Deferred revenue expected to be recognized	$	14,954	$	17,507	$	15,214	$	12,830	$	21,476	$	81,981

Other current liabilities

Other current liabilities consist of the following:


	December 31, 2022		October 1, 2022
(In thousands)
Reserve for returns	$	21,197	$	18,263
Short-term operating lease liabilities		10,827		10,532
Warranty liability		9,917		5,771
Other		15,327		5,083
Total other current liabilities	$	57,268	$	39,649

The following table presents the changes in the Company’s warranty liability for the three months ended December 31, 2022, and January 1, 2022:


	December 31, 2022			January 1, 2022
(In thousands)
Warranty liability, beginning of period	$	5,771		$	5,604
Provision for warranties issued during the period		6,177			5,359
Settlements of warranty claims during the period		(2,031	)		(1,297	)
Warranty liability, end of period	$	9,917		$	9,666