The Company accounts for revenue in accordance with ASU 2014-09, Revenue from Contracts from Customers (Topic 606), which the Company adopted on July 1, 2017, using the retrospective method. The Company derives the majority of its revenue from sales of its networking equipment, with the remaining revenue generated from service fees primarily relating to maintenance contracts with additional revenues from professional services, and training for its products. The Company sells its products 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 its 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 services may be sold separately or in bundled packages.

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 Topic 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 the best estimated selling price approach.

The Company’s performance obligations are satisfied at a point in time or over time as work progresses. Substantially all of the Company’s product sales revenue is recognized at a point in time. Substantially all of the Company’s service revenue is recognized over time. For revenue recognized over time, the Company uses an input measure, days elapsed, to measure progress.

On March 31, 2019, the Company had $187.7 million of remaining performance obligations, which is comprised of deferred maintenance revenue and services not yet delivered. The Company expects to recognize approximately 29 percent of its remaining performance obligations as revenue in fiscal 2019, an additional 49 percent in fiscal 2020 and 22 percent 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 consolidated balance sheet. Services provided under renewable support arrangements of the Company are billed in accordance with agreed-upon contractual terms, which are typically at periodic intervals (e.g., quarterly or annually). The Company sometimes receives payments from its customers in advance of services being provided, resulting in deferred revenues. These liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period.

Revenue recognized for the three months ended March 31, 2019 and 2018 that was included in the deferred revenue balance at the beginning of each period was $54.8 million and $50.6 million, respectively. Revenue recognized for the nine months ended March 31, 2019 and 2018 that was included in the deferred revenue balance at the beginning of each period was $110.8 million and $66.7 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 service contracts and contract renewals are recoverable and therefore the Company’s consolidated balance sheets included capitalized balances in the amount of $5.6 million and $4.3 million at March 31, 2019 and June 30, 2018, respectively. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately three 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, 2019 and 2018, was $0.8 million and $0.5 million, respectively. Amortization recognized during the nine months ended March 31, 2019 and 2018 was $2.2 million and $1.4 million, respectively. There was no impairment loss in relation to the costs capitalized.

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.

The following table sets forth the Company’s revenue disaggregated by sales channel and geographic region based on the customer’s ship-to locations (in thousands):

	Three Months Ended
	March 31, 2019						March 31, 2018
	Distributor		Direct		Total		Distributor		Direct		Total
Americas:
United States	$	72,071	$	56,096	$	128,167	$	76,392	$	56,929	$	133,321
Other		4,930		5,589		10,519		4,288		6,165		10,453
Total Americas		77,001		61,685		138,686		80,680		63,094		143,774
EMEA		48,834		35,076		83,910		58,668		36,120		94,788
APAC		4,850		23,418		28,268		3,085		20,357		23,442
Total net revenues	$	130,685	$	120,179	$	250,864	$	142,433	$	119,571	$	262,004

	Nine Months Ended
	March 31, 2019						March 31, 2018
	Distributor		Direct		Total		Distributor		Direct		Total
Americas:
United States	$	172,752	$	171,359	$	344,111	$	181,415	$	160,484	$	341,899
Other		17,893		16,494		34,387		13,417		20,252		33,669
Total Americas		190,645		187,853		378,498		194,832		180,736		375,568
EMEA		190,041		98,687		288,728		165,856		97,647		263,503
APAC:		11,967		64,237		76,204		11,480		54,291		65,771
Total net revenues	$	392,653	$	350,777	$	743,430	$	372,168	$	332,674	$	704,842

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

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

	Three Months Ended		Nine Months Ended
	March 31, 2019	March 31, 2018	March 31, 2019	March 31, 2018
Tech Data Corporation	14%	14%	17%	13%
Westcon Group Inc.	12%	14%	13%	14%
Jenne Corporation	21%	13%	15%	11%

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

	March 31, 2019	June 30, 2018
Westcon Group Inc.	10%	*
Tech Data Corporation	*	17%
Jenne Corporation	31%	13%

* Less than 10% of accounts receivable