Revenues

9 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenues

3.Revenues

The Company accounts for revenues in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The Company derives the majority of its revenues from sales of its networking equipment, with the remaining revenues generated from sales of subscription and support, which primarily includes software subscriptions delivered as software as a service (“SaaS”) and additional revenues from maintenance contracts, professional services and training for its products. The Company sells its products, SaaS and maintenance contracts direct to customers and to partners in two distribution channels, or tiers. The first tier consists of a limited number of independent distributors that stock the Company's products and sell primarily to resellers. The second tier of the distribution channel consists of non-stocking distributors and value-added resellers that sell directly to end-users. Products and subscription and support may be sold separately or in bundled packages.

Revenue Recognition

Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Certain of the Company’s contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which the Company separately sells these products. For items that are not sold separately, the Company estimates the stand-alone selling prices using other observable inputs.

The Company’s performance obligations are satisfied at a point in time or over time as the customer receives and consumes the benefits provided. Substantially all of the Company’s product sales revenues are recognized at a point in time. Substantially all of the Company’s subscription and support revenues are recognized over time. For revenues recognized over time, the Company uses an input measure, days elapsed, to measure progress.

On March 31, 2024, the Company had $558.3 million of remaining performance obligations, which primarily comprised deferred maintenance and deferred SaaS revenues. The Company expects to recognize approximately 18% of its deferred revenue as revenue in the remainder of fiscal 2024, an additional 42% in fiscal 2025, and 40% of the balance thereafter.

Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue in the condensed consolidated balance sheets. Services provided under renewable support arrangements of the Company are billed in accordance with agreed-upon contractual terms, which are either billed fully at the inception of contract or at periodic intervals (e.g., quarterly or annually). The Company generally receives payments from its customers in advance of services being provided, resulting in deferred revenues. These liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.

Revenue recognized for the three months ended March 31, 2024 and 2023 that was included in the deferred revenue balance at the beginning of each period was $95.9 million and $81.0 million, respectively. Revenue recognized for the nine months ended March 31, 2024 and 2023 that was included in the deferred revenue balance at the beginning of each period was $230.8 million and $193.7 million, respectively.

Contract Costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representatives as a result of obtaining subscription and support contracts and contract renewals are recoverable and therefore the Company’s condensed consolidated balance sheets included capitalized balances in the amount of $22.7 million and $20.0 million at March 31, 2024 and June 30, 2023, respectively. Capitalized commissions are included within other assets in the condensed consolidated balance sheets. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately three and a half years, and are included in “Sales and marketing” in the accompanying condensed consolidated statements of operations. Amortization recognized during the three months ended March 31, 2024 and 2023 was $2.8 million and $2.3 million, respectively. Amortization recognized during the nine months ended March 31, 2024 and 2023 was $8.0 million and $6.7 million, respectively.

Estimated Variable Consideration. There were no material changes in the current period to the estimated variable consideration for performance obligations, which were satisfied or partially satisfied during previous periods.

Revenues by Category

The Company operates in three geographic regions: Americas, EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific). The following table sets forth the Company’s net revenues disaggregated by sales channel and geographic region based on the billing addresses of its customers (in thousands):

	Three Months Ended
	March 31, 2024							March 31, 2023
	Distributor			Direct		Total		Distributor		Direct		Total
Americas:
United States	$	52,543		$	71,539	$	124,082	$	74,743	$	64,337	$	139,080
Other		5,934			4,357		10,291		14,079		4,523		18,602
Total Americas		58,477			75,896		134,373		88,822		68,860		157,682
EMEA		18,313			40,722		59,035		111,664		40,326		151,990
APAC*		(1,464	)		19,092		17,628		5,186		17,649		22,835
Total net revenues	$	75,326		$	135,710	$	211,036	$	205,672	$	126,835	$	332,507

	Nine Months Ended
	March 31, 2024						March 31, 2023
	Distributor		Direct		Total		Distributor		Direct		Total
Americas:
United States	$	251,694	$	204,689	$	456,383	$	245,852	$	203,991	$	449,843
Other		16,709		19,565		36,274		14,080		4,523		18,603
Total Americas		268,403		224,254		492,657		259,932		208,514		468,446
EMEA		184,706		128,537		313,243		285,066		120,482		405,548
APAC		7,510		47,140		54,650		14,627		59,923		74,550
Total net revenues	$	460,619	$	399,931	$	860,550	$	559,625	$	388,919	$	948,544

*The distributor revenue in the APAC region for the three months ended March 31, 2024 reflects a higher level of customer rebates for the distributors, resulting from higher sell-through to end users than the Company's product sales into these distributors.

For the nine months ended March 31, 2024, the Company generated approximately 10% of its net revenues from the Netherlands. For the three and nine months ended March 31, 2023, the Company generated 17% and 12% of its net revenues from the Netherlands, respectively. No other foreign country accounted for 10% or more of its net revenues for the three and nine months ended March 31, 2024 and 2023.

Customer Concentrations

The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit.

The following table sets forth customers accounting for 10% or more of the Company’s net revenues for the periods indicated below:

	Three Months Ended		Nine Months Ended
	March 31, 2024	March 31, 2023	March 31, 2024	March 31, 2023
TD Synnex Corporation	22%	19%	21%	19%
Westcon Group, Inc.	13%	25%	17%	20%
Jenne, Inc.	12%	15%	22%	14%
ScanSource, Inc.	11%	*	*	*
* Less than 10% of revenue

The following table sets forth major customers accounting for 10% or more of the Company’s net accounts receivable balance:

	March 31, 2024	June 30, 2023
Jenne, Inc.	38%	39%
TD Synnex Corporation	*	10%
ScanSource, Inc.	*	10%
* Less than 10% of accounts receivable