Deferred Revenue and Commissions

6 Months Ended

Aug. 07, 2022

Revenue from Contract with Customer [Abstract]

Deferred Revenue and Commissions

Deferred Revenue and Commissions

Deferred Commissions

Deferred commissions consist of incremental costs paid to our sales force to obtain customer contracts.

Changes in total deferred commissions during the periods presented are as follows (in thousands):

	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2022		2023		2022		2023
Beginning balance	$	185,875	$	230,998	$	187,924	$	246,307
Additions	42,791		36,638		71,980		63,122
Recognition of deferred commissions	(32,701)		(31,955)		(63,939)		(73,748)
Ending balance	$	195,965	$	235,681	$	195,965	$	235,681

Of the $235.7 million total deferred commissions balance at the end of the second quarter of fiscal 2023, we expect to recognize approximately 30% as commission expense over the next 12 months and the remainder thereafter.

There was no impairment related to capitalized commissions for the second quarter and first two quarters of fiscal 2022 and 2023.

Deferred Revenue

Deferred revenue primarily consists of amounts that have been invoiced but have not yet been recognized as revenue including performance obligations pertaining to subscription services.

Changes in total deferred revenue during the periods presented are as follows (in thousands):

	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2022		2023		2022		2023
Beginning balance	$	866,160	$	1,112,473	$	843,697	$	1,079,872
Additions	215,613		296,676		402,464		541,256
Recognition of deferred revenue	(171,959)		(230,458)		(336,347)		(442,437)
Ending balance	$	909,814	$	1,178,691	$	909,814	$	1,178,691

Revenue recognized during the second quarter of fiscal 2022 and 2023 from deferred revenue at the beginning of each respective period was $155.3 million and $201.4 million. Revenue recognized during the first two quarters of fiscal 2022 and 2023 from deferred revenue at the beginning of each respective period was $258.6 million and $341.7 million.

Remaining Performance Obligations

Total remaining performance obligations (RPO) which is contracted but not recognized revenue was $1.5 billion at the end of the second quarter of fiscal 2023. RPO consists of both deferred revenue and non-cancelable amounts that are expected to be invoiced and recognized as revenue in future periods. Product orders are generally cancelable until delivery has occurred, and as such unfulfilled product orders are excluded from RPO. Of the $1.5 billion contracted but not recognized revenue at the end of the second quarter of fiscal 2023, we expect to recognize approximately 47% over the next 12 months, and the remainder thereafter.