The Company accounts for revenue in accordance with ASU 2014-09 Revenue from Contracts with 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 relating to maintenance contracts, 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 a non-stocking distributors and value-added resellers that sell directly to end-users. Products and services may be sold separately or in bundled packages.

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer products and services, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled.

For all of the Company’s sales and distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment for product sales. Revenue from maintenance contracts is recognized over time as the Company’s performance obligations are satisfied. This is typically the contractual service period, which ranges from one to three years. For product sales to value-added resellers of the Company, non-stocking distributors and end-user customers, the Company generally does not grant return privileges, except for defective products during the warranty period, nor does the Company grant pricing credits. Sales taxes collected from customers are excluded from revenues. Shipping costs are included in cost of product revenues. Sales incentives and other programs that the Company may make available to these customers are considered to be a form of variable consideration and the Company maintains estimated accruals and allowances using the expected value method. There were no material changes in the current period to the estimated transaction price for performance obligations which were satisfied or partially satisfied during previous periods.

Sales to stocking distributors are made under terms allowing certain price adjustments and limited rights of return (known as “stock rotation”) of the Company’s products held in their inventory. Stock rotation rights grant the distributor the ability to return certain specified amounts of inventory. Stock rotation adjustments are an additional form of variable consideration and are estimated using the expected value method based on historical return rates. Frequently, distributors need to sell at a price lower than the contractual distribution price in order to win business and submit rebate requests for the Company’s pre-approval prior to selling the product to a customer at the discounted price. At the time the distributor invoices its customer or soon thereafter, the distributor submits a rebate claim to the Company to adjust the distributor’s cost from the contractual price to the pre-approved lower price. After the Company verifies that the claim was pre-approved, a credit memo is issued to the distributor for the rebate claim. In determining the transaction price, the Company considers these rebate adjustments to be variable consideration. Such price adjustments are estimated using the expected value method based on an analysis of actual claims, at the distributor level over a period of time considered adequate to account for current pricing and business trends. 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.

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 revenues as reflected on the consolidated statements of operations for the years ended 2019, 2018 and 2017 are 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.

At June 30, 2019, the Company had $203.2 million of remaining performance obligations, which is comprised of deferred maintenance revenue and services not yet delivered. The Company expects to recognize approximately 71 percent of its remaining performance obligations as revenue in fiscal 2020, an additional 16 percent by fiscal 2021 and 13 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 sheets. 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) with the corresponding revenue recognized over time throughout the contractual service period. The Company sometimes receives payments from its customers in advance of other services being provided, resulting in deferred revenues until the underlying performance obligations are satisfied. These liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. See Note 4 for contract balance information for accounts receivable and deferred revenue.

Revenue recognized for the years ended June 30, 2019 and 2018, that was included in the deferred revenue balance at the beginning of each period was $126.7 million and $76.6 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, in excess of one year, are recoverable and therefore the Company capitalized them as contract costs in the amount of $6.5 million and $4.3 million at June 30, 2019 and 2018, respectively, in “Other assets” in the accompanying consolidated balance sheets. 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 consolidated statements of operations. Amortization recognized during the years ended 2019, 2018 and 2017 was $3.0 million, $2.1 million and $1.5 million, respectively.

Revenue by Category: The following tables set forth the Company’s revenue disaggregated by sales channel and geographic region based on the billing addresses of its customers (in thousands):

	Year Ended June 30, 2019
Net Revenues	Distributor		Direct		Total
Americas:
United States	$	259,873	$	238,832	$	498,705
Other		22,264		20,632		42,896
Total Americas		282,137		259,464		541,601
EMEA:		229,223		129,104		358,327
APAC:		14,598		81,263		95,861
Total net revenues	$	525,958	$	469,831	$	995,789

	Year Ended June 30, 2018
Net Revenues	Distributor		Direct		Total
Americas:
United States	$	271,975	$	219,642	$	491,617
Other		19,414		25,274		44,688
Total Americas		291,389		244,916		536,305
EMEA:		218,682		136,064		354,746
APAC:		15,621		76,470		92,091
Total net revenues	$	525,692	$	457,450	$	983,142

	Year Ended June 30, 2017
Net Revenues	Distributor		Direct		Total
Americas:
United States	$	146,805	$	161,175	$	307,980
Other		11,861		13,022		24,883
Total Americas		158,666		174,197		332,863
EMEA:		135,414		84,658		220,072
APAC:		8,953		45,196		54,149
Total net revenues	$	303,033	$	304,051	$	607,084

The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable and short-term investments. 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 revenue:

		Year Ended
	June 30, 2019	June 30, 2018	June 30, 2017
Tech Data Corporation	18%	14%	16%
Jenne Corporation	17%	13%	15%
Westcon Group Inc.	12%	13%	12%

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


	June 30, 2019			June 30, 2018
Tech Data Corporation		12	%		17	%
Jenne Corporation		35	%		13	%