Deferred Revenue and Commissions

9 Months Ended

Nov. 05, 2023

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):

	Third Quarter of Fiscal				First Three Quarters of Fiscal
	2023		2024		2023		2024
Beginning balance	$	235,681	$	255,417	$	246,307	$	245,856
Additions	35,827		50,183		98,949		130,312
Recognition of deferred commissions	(36,376)		(40,683)		(110,124)		(111,251)
Ending balance	$	235,132	$	264,917	$	235,132	$	264,917

Of the $264.9 million total deferred commissions balance at the end of the third quarter of fiscal 2024, we expect to recognize approximately 28% as commission expense over the next 12 months and the remainder thereafter.

There was no impairment related to capitalized commissions for the third quarter and first three quarters of fiscal 2023 and 2024.

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):

	Third Quarter of Fiscal				First Three Quarters of Fiscal
	2023		2024		2023		2024
Beginning balance	$	1,178,691	$	1,437,043	$	1,079,872	$	1,385,650
Additions	313,279		368,708		854,535		975,149
Recognition of deferred revenue	(243,751)		(309,244)		(686,188)		(864,292)
Ending balance	$	1,248,219	$	1,496,507	$	1,248,219	$	1,496,507

Revenue recognized during the third quarter of fiscal 2023 and 2024 from deferred revenue at the beginning of each respective period was $216.8 million and $280.4 million. Revenue recognized during the first three quarters of fiscal 2023 and 2024 from deferred revenue at the beginning of each respective period was $466.0 million and $589.1 million.

Remaining Performance Obligations

Total remaining performance obligations (RPO) which is contracted but not recognized revenue was $2.0 billion at the end of the third quarter of fiscal 2024, and includes a $41.0 million non-cancelable product order that we expect to fulfill subsequent to current fiscal year. 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 that are cancelable are excluded from RPO. Of the $2.0 billion RPO at the end of the third quarter of fiscal 2024, we expect to recognize approximately 46% over the next 12 months, and the remainder thereafter.