Other Financial Information

9 Months Ended

Sep. 30, 2023

Other Financial Information [Abstract]

Other Financial Information

Note 5. Other Financial Information

Total Inventory

Total inventory consisted of the following (in millions):

	As of
	September 30, 2023		December 31, 2022
Production and service materials	$	721.3	$	479.6
Finished goods	293.2		163.3
Total inventory	$	1,014.5	$	642.9
Reported as:
Inventory	$	976.3	$	619.4
Other long-term assets (1)	38.2		23.5
Total inventory	$	1,014.5	$	642.9

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(1) Long-term inventory balance classified as other long-term assets in the Company's Condensed Consolidated Balance Sheets consists of last time buy component inventory to be consumed beyond twelve months.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in millions):

	As of
	September 30, 2023		December 31, 2022
Contract manufacturer deposits	$	347.8	$	434.7
Prepaid expenses	123.2		104.3
Other current assets	109.6		141.0
Total prepaid expenses and other current assets	$	580.6	$	680.0

Warranties

Changes during the nine months ended September 30, 2023 in the Company’s warranty reserve as reported within other accrued liabilities in the Condensed Consolidated Balance Sheets were as follows (in millions):

Balance as of December 31, 2022	$	29.5
Provisions made during the period	23.9
Actual costs incurred during the period	(24.0)
Balance as of September 30, 2023	$	29.4

Deferred Revenue

Details of the Company's deferred revenue, as reported in the Condensed Consolidated Balance Sheets, were as follows (in millions):

	As of
	September 30, 2023		December 31, 2022
Deferred product revenue	$	88.5	$	108.8
Deferred service revenue	1,751.5		1,554.3
Total	$	1,840.0	$	1,663.1
Reported as:
Current	$	1,037.6	$	1,020.5
Long-term	802.4		642.6
Total	$	1,840.0	$	1,663.1

Revenue

See Note 10, Segments, for disaggregated revenue by customer solution, customer vertical, and geographic region.

Product revenue of $6.9 million and $44.2 million included in deferred revenue at January 1, 2023 were recognized during the three and nine months ended September 30, 2023, respectively. Service revenue of $202.9 million and $770.7 million included in deferred revenue at January 1, 2023 were recognized during the three and nine months ended September 30, 2023, respectively.

Remaining Performance Obligations

Remaining Performance Obligations ("RPO") are comprised mainly of deferred product and service revenue, and to a lesser extent, unbilled service revenue from non-cancellable contracts for which the Company has not invoiced and has an obligation to perform, and for which revenue has not yet been recognized in the financial statements. The Company's RPO does not include backlog.

The following table summarizes the breakdown of RPO as of September 30, 2023 and when the Company expects to recognize the amounts as revenue (in millions):

	Revenue Recognition Expected by Period
	Total		Less than 1 year		1-3 years		More than 3 years
Product	$	91.0	$	74.7	$	13.2	$	3.1
Service	1,761.4		975.1		595.8		190.5
Total	$	1,852.4	$	1,049.8	$	609.0	$	193.6

Deferred Contract Cost

The Company capitalizes direct and incremental costs incurred to acquire contracts, primarily sales commissions, for which the associated revenue is expected to be recognized in future periods. The Company incurs these costs in connection with both initial contracts and renewals. These costs are initially deferred, recorded as prepaid expenses and other current assets or other long-term assets, and are amortized over a period of benefit, which is typically over the term of the customer contracts or when product is delivered and revenue recognized. Commission expense is included in sales and marketing expenses in the accompanying Condensed Consolidated Statements of Operations.

Deferred contract cost was $42.8 million as of September 30, 2023. For the three and nine months ended September 30, 2023, amortization expense associated with the deferred commissions was $8.5 million and $29.7 million, respectively, and there were no impairment charges recognized.

Other Expense, Net

Other expense, net, consisted of the following (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Interest income	$	14.1	$	5.5	$	35.3	$	11.4
Interest expense	(20.5)		(15.2)		(59.4)		(41.1)
Gain (loss) on other investments, net (1) (2)	0.4		(1.2)		2.3		(10.2)
Other	1.2		1.9		0.8		4.0
Other expense, net	$	(4.8)	$	(9.0)	$	(21.0)	$	(35.9)

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(1) Other investments represent fixed income securities and equity investments with readily determinable fair value.

(2) The prior period amounts have been reclassified to conform to the current period presentation.