Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

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 March 31, 2022 and December 31, 2021 (in thousands):

	March 31, 2022		December 31, 2021
Deferred costs included in prepaid and other current assets	$	39,948	$	43,562
Deferred costs included in other assets	28,290		30,436
Total deferred costs	$	68,238	$	73,998

The following table summarizes additional information related to incremental costs to obtain a contract with a customer for the three months ended March 31, 2022 and 2021 (in thousands):

	For the Three Months Ended March 31,
	2022		2021
Amortization expense related to deferred costs	$	15,022	$	13,727
Incremental costs capitalized	9,484		9,872

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 months ended March 31, 2022 and 2021 (in thousands):

	For the Three Months Ended March 31,
	2022		2021
U.S.	$	481,007	$	463,180
International	422,640		379,528
Total revenue	$	903,647	$	842,708

The Company reports its revenue in three solution categories: security, delivery and compute. Revenue by solution was previously reported by group: Security Technology Group and Edge Technology Group. Revenue from security solutions was previously presented as Security Technology Group revenue and revenue from delivery and compute solutions was previously presented as Edge Technology Group revenue. Security includes solutions that are designed to protect business online by keeping infrastructure, websites, applications and users safe. Delivery includes solutions that are designed to enable business online, including media delivery and web performance. Compute includes edge cloud optimization solutions and net storage. The following table summarizes revenue by solution category included in the Company’s condensed consolidated statements of income for the three months ended March 31, 2022 and 2021 (in thousands):

	For the Three Months Ended March 31,
	2022		2021
Security	$	381,567	$	310,219
Delivery	444,148		473,669
Compute	77,932		58,820
Total revenue	$	903,647	$	842,708

Most security, delivery and compute 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 usage commitments that expire each period. Any usage over a given commitment is recognized in the period in which the units are served. Any bursting over given commitments is recognized in the period in which the traffic is served. A small percentage of the Company's contracts 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 three months ended March 31, 2022 and 2021, the Company recognized $56.2 million and $43.3 million of revenue that was included in deferred revenue as of December 31, 2021 and 2020, respectively.

As of March 31, 2022, the aggregate amount of remaining performance obligations from contracts with customers was $3.2 billion. The Company expects to recognize approximately 70% of its remaining performance obligations as revenue over the next 12 months, with the remaining 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 three months ended March 31, 2022 and 2021, related to performance obligations satisfied in previous periods was not material.