Other Financial Information

6 Months Ended

Jun. 30, 2024

Other Financial Information [Abstract]

Other Financial Information

Note 5. Other Financial Information

Total Inventory

Total inventory consisted of the following (in millions):

	As of
	June 30, 2024		December 31, 2023
Production and service materials	$	732.1	$	719.0
Finished goods	279.9		299.0
Total inventory	$	1,012.0	$	1,018.0
Reported as:
Inventory	$	926.1	$	952.4
Other long-term assets (1)	85.9		65.6
Total inventory	$	1,012.0	$	1,018.0

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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 the Company's normal operating cycle.

Prepaid Expenses and Other Current Assets

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

	As of
	June 30, 2024		December 31, 2023
Contract manufacturer deposits	$	200.3	$	316.4
Prepaid expenses	178.7		140.9
Other current assets	138.6		134.2
Total prepaid expenses and other current assets	$	517.6	$	591.5

During the three months ended June 30, 2024, the Company did not record any material allowance for credit loss. During six months ended June 30, 2024, the Company recorded an allowance for credit loss of $7.7 million on note receivables due from a privately-held investee. The credit loss represents the difference between the net amount expected to be collected and the amortized cost of the note receivable.

Warranties

Changes during the six months ended June 30, 2024 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, 2023	$	29.4
Provisions made during the period	21.5
Actual costs incurred during the period	(21.1)
Balance as of June 30, 2024	$	29.8

Deferred Revenue

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

	As of
	June 30, 2024		December 31, 2023
Deferred product revenue, net	$	84.6	$	92.1
Deferred service revenue, net	2,003.8		1,932.8
Total	$	2,088.4	$	2,024.9
Reported as:
Current	$	1,147.9	$	1,130.0
Long-term	940.5		894.9
Total	$	2,088.4	$	2,024.9

Revenue

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

Product revenue of $22.9 million and $40.1 million included in deferred revenue at January 1, 2024 were recognized during the three and six months ended June 30, 2024, respectively. Service revenue of $290.5 million and $636.0 million included in deferred revenue at January 1, 2024 were recognized during the three and six months ended June 30, 2024, 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 following table summarizes the breakdown of RPO(1) as of June 30, 2024 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	$	84.9	$	71.2	$	11.7	$	2.0
Service	2,016.1		1,084.0		719.9		212.2
Total	$	2,101.0	$	1,155.2	$	731.6	$	214.2

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(1) The Company's RPO does not include backlog. Backlog consists of purchase orders for product primarily expected to be shipped to the Company's distributors, resellers, or end customers within the next 90 days. The following amounts are not included in the Company's backlog: (1) deferred revenue, (2) unbilled contract revenue, (3) all service obligations, including software as a service (SaaS), and (4) certain future revenue adjustments for items such as sales return reserves and early payment discounts.

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 $42.2 million as of June 30, 2024. For the three and six months ended June 30, 2024, amortization expense associated with the deferred commissions was $23.0 million and $41.2 million, respectively, and there were no impairment charges recognized.

Other Income (Expense), Net

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest income	$	16.7	$	11.7	$	33.6	$	21.2
Interest expense	(20.5)		(19.7)		(41.0)		(38.9)
Gain on other investments, net (1)	4.6		1.2		8.0		1.9
Other	0.5		(0.6)		2.8		(0.4)
Other income (expense), net	$	1.3	$	(7.4)	$	3.4	$	(16.2)

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