Incremental Costs to Obtain a Contract with a Customer

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Incremental Costs to Obtain a Contract with a Customer

Incremental Costs to Obtain a Contract with a Customer

The following table summarizes the deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Deferred costs included in prepaid and other current assets	$	42,299	$	54,516
Deferred costs included in other assets	27,551		23,200
Total deferred costs	$	69,850	$	77,716

The following table summarizes additional information related to incremental costs to obtain a contract with a customer for each of the three and nine month periods ended September 30, 2021 and 2020 (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Amortization expense related to deferred costs	$	14,901	$	14,816	$	43,304	$	45,007
Incremental costs capitalized	$	13,164	$	16,550	$	36,957	$	39,925

Amortization expense related to deferred costs is primarily included in sales and marketing expense in the condensed consolidated statements of income.

Revenue from Contracts with Customers

The Company sells its solutions through a sales force located both domestically and abroad. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale originated. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. The following table summarizes revenue by geography included in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
U.S.	$	448,792	$	437,381	$	1,361,525	$	1,309,979
International	411,541		355,464		1,194,340		1,041,883
Total revenue	$	860,333	$	792,845	$	2,555,865	$	2,351,862

Leveraging its Intelligent Edge Platform and a global sales organization, the Company offers solutions that are developed and maintained through two groups: the Security Technology Group and the Edge Technology Group. The Security Technology Group includes solutions that are designed to protect business online by keeping infrastructure, websites, applications and users safe, while the Edge Technology Group includes solutions that are designed to enable business online, including media delivery, web performance and edge computing solutions. The following table summarizes revenue by product group included in the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Security Technology Group	$	334,649	$	265,869	$	969,996	$	765,485
Edge Technology Group	525,684		526,976		1,585,869		1,586,377
Total revenue	$	860,333	$	792,845	$	2,555,865	$	2,351,862

Most security and content delivery services represent obligations that are satisfied over time as the customer simultaneously receives and consumes the services provided by the Company. Accordingly, the majority of the Company's revenue is recognized over time, generally ratably over the term of the arrangement due to consistent monthly traffic commitments that expire each period. A small percentage of the Company's services are satisfied at a point in time, such as one-time professional services contracts, integration services and most license sales where the primary obligation is delivery of the license at the start of the term. In these cases, revenue is recognized at a point in time of delivery or satisfaction of the performance obligation.

During the nine months ended September 30, 2021 and 2020, the Company recognized $72.2 million and $66.0 million of revenue that was included in deferred revenue as of December 31, 2020 and 2019, respectively.

As of September 30, 2021, the aggregate amount of remaining performance obligations from contracts with customers was $2.8 billion. The Company expects to recognize approximately 70% of its remaining performance obligations as revenue over the next 12 months, with the remainder recognized thereafter. Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. This consists of future committed revenue for monthly, quarterly or annual periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced in prior periods for which the related performance obligations have not been satisfied. It excludes estimates of variable consideration such as usage-based contracts with no committed contract as well as anticipated renewed contracts. Revenue recognized during each of the nine months ended September 30, 2021 and 2020, related to performance obligations satisfied in previous periods was not material.