Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2023

Revenue Recognition [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with CustomersThe Company records deferred revenue when cash payments are received or due in advance of its performance obligations offset by revenue recognized in the period. Revenues of $57.2 million and $51.4 million were recognized during the three months ended September 30, 2023 and 2022, respectively, and $257.4 million and $227.3 million were recognized during the nine months ended September 30, 2023 and 2022, respectively, which amounts were included in the deferred revenue balances of $317.2 million and $290.6 million as of December 31, 2022 and 2021, respectively.

The Company's payment terms vary by the type and location of its customers. The term between invoicing and when payment is due is not significant. In certain circumstances, based on the credit quality of the customer, the Company requires payment before the products or services are delivered to the customer.

The following table sets forth the expected revenue from all remaining performance obligations as of September 30, 2023:

	(in thousands)
2023 (remaining three months)	$	54,190
2024	162,095
2025	88,045
2026	24,142
2027	1,801
2028 and thereafter	417
Total	$	330,690

Revenues allocated to remaining performance obligations represents the transaction price of noncancelable orders for which service has not been performed, which include deferred revenue and the amounts that will be invoiced and recognized as revenues in future periods from open contracts and excludes unexercised renewals. The Company applied the short-term contract exemption to exclude the remaining performance obligations that are part of a contract that has an original expected duration of one year or less.

From time to time, the Company enters into contracts with customers that extend beyond one year, with certain of its customers electing to pay for more than one year of services upon contract execution. The Company concluded that these contracts did not contain a financing component.

Revenues by sales channel are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Direct	$	80,499	$	72,958	$	234,410	$	209,493
Partner	61,497		52,603		175,478		149,381
Total	$	141,996	$	125,561	$	409,888	$	358,874

The Company utilizes partners to enable and accelerate the adoption of its cloud platform by increasing its distribution capabilities and market awareness of its cloud platform as well as by targeting geographic regions outside the reach of its direct sales force. The Company's channel partners maintain relationships with their customers throughout the territories in which they operate and provide their customers with services and third-party solutions to help meet those customers’ evolving security and compliance requirements. As such, these partners may offer the Company's IT security and compliance solutions in conjunction with one or more of their own products or services and act as a conduit through which the Company can connect with these prospective customers to offer its solutions. For sales involving a channel partner, the channel partner engages with the prospective customer directly and involves the Company's sales team as needed to assist in developing and closing an order. When a channel partner secures a sale, the Company sells the associated subscription to the channel partner who in turn resells the subscription to the customer. Sales to channel partners are made at a discount and revenues are recorded at this discounted price over the subscription terms. The Company does not have any influence or specific knowledge of its partners' selling terms with their customers. See Note 12, "Segment Information and Information about Geographic Area" for disaggregation of revenue by geographic area.

Deferred costs to obtain contracts are as follows:

	September 30, 2023		December 31, 2022
	(in thousands)
Current	$	5,450	$	5,018
Noncurrent	$	10,726	$	10,090

For the three months ended September 30, 2023 and 2022, the Company recognized $1.5 million and $1.3 million, respectively, of amortization expense relating to deferred costs to obtain contracts in sales and marketing expense in the condensed consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, the Company recognized $4.4 million and $3.6 million, respectively, of amortization expenses related to deferred costs to obtain contracts in sales and marketing expense in the condensed consolidated statements of operations. During the same periods, there was no impairment loss related to the deferred costs to obtain contracts.

As of December 31, 2021, the net carrying value of the Company’s accounts receivable, deferred revenues, current and deferred revenues, noncurrent were $109.0 million, $257.9 million and $32.7 million, respectively.