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 software delivered as a service (“SaaS”) and 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 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 service and SaaS revenue is recognized over time. For revenue recognized over time, the Company uses an input measure, days elapsed, to measure progress.

On March 31, 2020, the Company had $271.7 million of remaining performance obligations, which are primarily comprised of deferred maintenance and SaaS revenue. The Company expects to recognize approximately 24 percent of its deferred revenue as revenue in fiscal 2020, an additional 46 percent in fiscal 2021 and 30 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 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 sometimes 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, 2020 and 2019 that was included in the deferred revenue balance at the beginning of each period was $64.3 million and $54.8 million, respectively. Revenue recognized for the nine months ended March 31, 2020 and 2019 that was included in the deferred revenue balance at the beginning of each period was $116.7 million and $110.8 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 condensed consolidated balance sheets included capitalized balances in the amount of $7.4 million and $6.5 million at March 31, 2020 and June 30, 2019, 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, 2020 and 2019, was $1.1 million and $0.8 million, respectively. Amortization recognized during the nine months ended March 31, 2020 and 2019 was $4.1 million and $2.2 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.

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, 2020						March 31, 2019
	Distributor		Direct		Total		Distributor		Direct		Total
Americas:
United States	$	38,666	$	56,391	$	95,057	$	72,071	$	56,096	$	128,167
Other		3,277		5,781		9,058		4,930		5,589		10,519
Total Americas		41,943		62,172		104,115		77,001		61,685		138,686
EMEA		49,979		33,630		83,609		48,834		35,076		83,910
APAC		3,242		18,553		21,795		4,850		23,418		28,268
Total net revenues	$	95,164	$	114,355	$	209,519	$	130,685	$	120,179	$	250,864

	Nine Months Ended
	March 31, 2020						March 31, 2019
	Distributor		Direct		Total		Distributor		Direct		Total
Americas:
United States	$	168,755	$	180,358	$	349,113	$	172,752	$	171,359	$	344,111
Other		15,496		16,343		31,839		17,893		16,494		34,387
Total Americas		184,251		196,701		380,952		190,645		187,853		378,498
EMEA		173,825		107,521		281,346		190,041		98,687		288,728
APAC		18,362		51,837		70,199		11,967		64,237		76,204
Total net revenues	$	376,438	$	356,059	$	732,497	$	392,653	$	350,777	$	743,430

Included in the above amounts are $2.2 million and $6.9 million of leasing revenue for the three and nine months ended March 31, 2020, respectively. Included in the above amounts are $2.7 million and $8.6 million of leasing revenue for the three and nine months ended March 31, 2019, respectively.

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, 2020	March 31, 2019	March 31, 2020	March 31, 2019
Tech Data Corporation	19%	14%	16%	17%
Jenne Corporation	*	21%	13%	15%
Westcon Group Inc.	19%	12%	14%	13%

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


	March 31, 2020			June 30, 2019
Tech Data Corporation		11	%		12	%
Jenne Corporation		10	%		35	%
Westcon Group Inc.		14	%	*