Balance Sheet Components

Marketable Securities

The following table summarizes the unrealized gains and losses and fair value of our available-for-sale marketable securities (in thousands):



	March 31, 2015
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government notes—due within one year	$	209,232	$	—	$	(79	)	$	209,153



	December 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government notes—due within one year	$	209,671	$	—	$	(245	)	$	209,426

We did not realize any other-than-temporary losses on our marketable securities for the three months ended March 31, 2015 and 2014 or the year ended December 31, 2014. None of our marketable securities have been in continuous unrealized loss positions for greater than twelve months as of March 31, 2015.

We invest in marketable securities that have maximum maturities of up to two years and are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these marketable securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those marketable securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are due primarily to changes in credit spreads and interest rates. We expect to realize the full value of all these investments upon maturity or sale. The weighted average remaining duration of our current marketable securities is approximately 0.6 years as of March 31, 2015.

Accounts Receivable, net

Accounts receivable, net consists of the following (in thousands):



	March 31, 2015			December 31, 2014
Accounts receivable	$	115,937		$	100,076
Allowance for doubtful accounts	(1,260		)	(1,063		)
Sales return reserve	(1,620		)	(2,031		)
Accounts receivable, net	$	113,057		$	96,982

Inventories

Inventories consist of the following (in thousands):



	March 31, 2015		December 31, 2014
Raw materials	$	17,237	$	17,094
Finished goods	73,988		63,425
Total inventories	$	91,225	$	80,519

Finished goods inventory includes deferred cost of revenue of $11.3 million and $2.5 million as of March 31, 2015 and December 31, 2014, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):



	March 31, 2015		December 31, 2014
Prepaid income taxes	$	26,412	$	25,212
Other current assets	5,323		9,820
Other prepaids and deposits	5,887		5,237
Total prepaid expenses and other current assets	$	37,622	$	40,269

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):



	March 31, 2015			December 31, 2014
Equipment and machinery	$	19,785		$	18,265
Computer hardware and software	8,600			7,772
Furniture and fixtures	1,837			1,373
Leasehold improvements	21,376			19,420
Building	35,154			35,154
Construction-in-process	5,877			6,532
Property and equipment, gross	92,629			88,516
Less: accumulated depreciation	(19,842		)	(16,958		)
Property and equipment, net	$	72,787		$	71,558

Building consists of capitalized construction costs of our leased building in Santa Clara, California. Based on the terms of the lease agreement and due to our involvement in certain aspects of the construction, such as our financial involvement in structural elements of asset construction, making decisions related to tenant improvement costs and purchasing insurance not reimbursable by the buyer-lessor (the Landlord), we are deemed the owner of the building (for accounting purposes only) during the construction period. We maintain continued involvement in the property after construction was completed and lack transferability of the risks and rewards of ownership, primarily due to our required maintenance of a $4.0 million letter of credit. Due to our continuing involvement in the property post construction and lack of transferability of related risks and rewards of ownership to the Landlord after construction is complete, we account for the building as a financing obligation. See “Note 5-Commitments and Contingencies". Accordingly, as of March 31, 2015 and December 31, 2014, we have recorded assets of $53.4 million, representing the total costs of the building and improvements incurred, including the costs paid by the Landlord. The building was completed in 2014.

Depreciation expense was $2.9 million and $2.3 million, for the three months ended March 31, 2015 and 2014, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	March 31, 2015		December 31, 2014
Accrued payroll related costs	$	10,809	$	30,749
Accrued warranty costs	3,686		3,204
Accrued manufacturing costs	2,682		1,089
Accrued professional fees	6,360		2,354
Accrued taxes	1,110		1,577
Other	4,273		1,396
Total accrued liabilities	$	28,920	$	40,369

Warranty Accrual

We offer a one-year warranty on all of our hardware products and a 90-day warranty against defects in the software embedded in the products. We accrue for potential warranty claims at the time of shipment as a component of cost of revenues based on historical experience and other relevant information. We accrue specifically identified reserves if and when we determine we have a systemic product failure. The accrued warranty liability is recorded in accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

The following table summarizes the activity related to our accrued liability for estimated future warranty costs (in thousands):



	Three Months Ended March 31,
	2015			2014
Warranty accrual, beginning of period	$	3,204		$	5,075
Liabilities accrued for warranties issued during the period	783			488
Warranty costs incurred during the period	(301		)	(908		)
Warranty accrual, end of period	$	3,686		$	4,655

Other Current Liabilities

Other current liabilities consist of the following (in thousands):



	March 31, 2015		December 31, 2014
Liability for early exercised shares subject to repurchase	$	3,860	$	4,616
Sales tax payable	2,715		3,101
Lease financing obligations, current portion	1,147		1,087
Other	740		2,445
Total other current liabilities	$	8,462	$	11,249