Balance Sheet Components (Tables)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of deferred revenue

Changes in the total short-term and long-term deferred revenue balance were as follows (in thousands):

	December 31,
	2019		2018		2017
Beginning balances	$	36,836	$	42,432	$	49,904
Deferral of revenue	45,040		40,003		46,193
Recognition of deferred revenue	(41,034)		(45,599)		(53,665)
Ending balances	$	40,842	$	36,836	$	42,432

Schedule of accounts receivable and revenue reserves

Changes in the revenue returns reserve were as follows (in thousands):

	December 31,
	2019		2018		2017
Beginning balances	$	104,001	$	109,872	$	98,851
Increases (1)	178,962		170,957		229,610
Returns taken	(181,637)		(176,828)		(218,589)
Ending balances	$	101,326	$	104,001	$	109,872

⁽¹⁾ Increases in the revenue returns reserve include provisions for open box returns and stock rotations.

Schedule of Allowance for Doubtful Accounts

Changes in the allowance for doubtful accounts were as follows (in thousands):

	December 31,
	2019		2018		2017(1)
Beginning balances	$	3,742	$	9,229	$	282
Increases	297		56		30,551
Write-offs	(291)		(5,543)		(21,604)
Ending balances	$	3,748	$	3,742	$	9,229

Schedule of inventories

Inventories consisted of the following (in thousands):

	December 31,
	2019		2018
Components	$	5,397	$	8,866
Finished goods	131,355		116,005
Total inventories	$	136,752	$	124,871

Schedule of prepaid expenses and other current asset

Prepaid expenses and other current assets consisted of the following (in thousands):

	December 31,
	2019		2018
Prepaid expenses	$	11,219	$	18,100
Prepaid marketing	3,347		3,258
Point-of-purchase displays, net	—		5,143
Derivative assets	—		623
Other	14,090		15,201
Total prepaid expenses and other current assets	$	28,656	$	42,325

Schedule of property and equipment

The useful lives of the property and equipment are as follows:
Tooling and manufacturing equipment	One to three years
Furniture and office equipment	Three years
Purchased software	Three years
Capitalized internally-developed software	Two to eight years
Leasehold improvements	Shorter of remaining lease term or ten years

Property and equipment, net, consisted of the following (in thousands):

	December 31,
	2019		2018
Tooling and manufacturing equipment	$	103,177	$	80,685
Furniture and office equipment	19,922		22,738
Purchased and internally-developed software	27,424		21,741
Leasehold improvements	59,926		67,715
Total property and equipment	210,449		192,879
Less: Accumulated depreciation and amortization	(127,693)		(86,593)
Property and equipment, net	$	82,756	$	106,286

Schedule of goodwill

The changes in the carrying amount of goodwill were as follows (in thousands):

	Goodwill
Balance at December 31, 2017	$	51,036
Goodwill acquired	9,943
Balance at December 31, 2018	60,979
Goodwill acquired	3,833
Balance at December 31, 2019	$	64,812

Schedule of intangible assets (excluding goodwill)

The carrying amounts of the intangible assets as of December 31, 2019 and December 31, 2018 were as follows (in thousands):

	December 31, 2019						December 31, 2018
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Developed technology	$	37,813	$	(23,910)	$	13,903	$	35,988	$	(15,983)	$	20,005
Customer relationships	3,790		(991)		2,799		3,790		(451)		3,339
Trademarks and other	1,278		(1,234)		44		1,278		(1,002)		276
Total intangible assets, net	$	42,881	$	(26,135)	$	16,746	$	41,056	$	(17,436)	$	23,620

Schedule of estimated future amortization expense

The estimated future amortization expense of acquired finite-lived intangible assets to be charged to cost of revenue and operating expenses after 2019, is as follows (in thousands):

	Cost of Revenue		Operating Expenses		Total
2020	$	6,325	$	1,269	$	7,594
2021	5,037		597		5,634
2022	1,488		597		2,085
2023	—		597		597
2024	—		597		597
Thereafter	—		239		239
Total intangible assets, net	$	12,850	$	3,896	$	16,746

Schedule of accrued liabilities

Accrued liabilities consisted of the following (in thousands):

	December 31,
	2019		2018
Accrued sales incentives	$	156,839	$	126,400
Sales returns reserve (1)	101,326		104,001
Product warranty	52,403		45,605
Accrued co-op advertising and marketing development funds	40,689		30,435
Employee-related liabilities	37,355		33,916
Accrued manufacturing expense and freight	35,112		21,357
Accrued sales and marketing	26,781		18,171
Sales taxes and VAT payable	19,603		20,121
Accrued research and development	19,232		8,783
Accrued legal settlements and fees	8,854		2,821
Inventory received but not billed	1,669		6,373
Finance lease liabilities	1,384		—
Derivative liabilities	748		549
Other	11,535		18,702
Accrued liabilities	$	513,530	$	437,234

(1) The adoption of ASU 2014-09 on January 1, 2018 requires the presentation of sales returns reserve as a current liability. This reserve was reported within “Accounts receivables, net” prior to the adoption of this new standard.

Schedule of product warranty reserves

Product warranty reserve activities were as follows (in thousands):

	December 31,
	2019		2018		2017
Beginning balances	$	45,605	$	87,882	$	99,923
Charged to cost of revenue	45,092		15,720		53,840
Changes in estimate related to pre-existing warranties (1)	7,421		(20,545)		11,788
Settlement of claims	(45,715)		(37,452)		(77,669)
Ending balances	$	52,403	$	45,605	$	87,882

(1) During 2019, the change related to pre-existing warranties resulting primarily due to a higher smartwatch mix, which has a higher cost content. During 2018, the change related to pre-existing warranties resulted primarily from improved product quality and a decrease in the estimated cost of replacement units. During 2017, changes related to pre-existing warranties resulted primarily from an increase in the estimated cost of replacement units.

Schedule of accumulated other comprehensive income

The components and activity of accumulated other comprehensive income (“AOCI”), net of tax, were as follows (in thousands):

	Unrealized Gains (Losses) on Cash Flow Hedges		Unrealized Gains (Losses) on Available-for-Sale Investments		Total
Balance at December 31, 2017	$	66	$	(75)	$	(9)
Other comprehensive income (loss) before reclassifications	7,587		(68)		7,519
Amounts reclassified from AOCI	(7,587)		11		(7,576)
Other comprehensive loss	—		(57)		(57)
Balance at December 31, 2018	66		(132)		(66)
Other comprehensive income (loss) before reclassifications	(66)		320		254
Amounts reclassified from AOCI	—		—		—
Other comprehensive income (loss)	(66)		320		254
Balance at December 31, 2019	$	—	$	188	$	188