Balance Sheet Components

9 Months Ended

Sep. 27, 2020

Balance Sheet Related Disclosures [Abstract]

Cash and Cash Equivalents and Restricted cash

The Company maintains certain cash balances restricted as to withdrawal or use. The restricted cash is comprised primarily of cash used as a collateral for a letter of credit associated with the Company’s lease agreement for its headquarters in San Jose, California. The Company deposits restricted cash with high credit quality financial institutions. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same amounts shown on the statements of cash flows:


	As of
	September 27, 2020		December 31, 2019
	(In thousands)
Cash and cash equivalents	$	173,619	$	236,680
Restricted cash	4,147		4,139
Total as presented on the unaudited condensed consolidated statements of cash flows	$	177,766	$	240,819


	As of
	September 29, 2019		December 31, 2018
	(In thousands)
Cash and cash equivalents	$	113,870	$	151,290
Restricted cash	4,130		4,134
Total as presented on the unaudited condensed consolidated statements of cash flows	$	118,000	$	155,424

Available-for-sale short-term investments


	As of September 27, 2020								As of December 31, 2019
	Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value		Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
	(In thousands)
U.S. treasuries	$	19,992	$	—	$	—	$	19,992	$	19,967	$	23	$	—	$	19,990

The Company’s short-term investments are classified as available-for-sale and consist of government securities with an original maturity or remaining maturity at the time of purchase of greater than three months and no more than 12 months. Accordingly, none of the available-for-sale securities have unrealized losses greater than 12 months. The Company did not recognize any allowance for credit losses related to available for sale short-term investment for the three and nine months ended September 27, 2020.

Accounts receivable, net


	As of
	September 27, 2020		December 31, 2019
	(In thousands)
Gross accounts receivable	$	56,940	$	127,926
Allowance for credit losses	(509)		(609)
Total accounts receivable, net	$	56,431	$	127,317

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.


	Three Months Ended		Nine Months Ended
	September 27, 2020		September 27, 2020
	(In thousands)
Balance at the beginning of the period	$	810	$	609
Provision for (recovery of) expected credit losses	(301)		(100)
Amounts written off charged against the allowance	—		—
Balance at the end of the period	$	509	$	509

Inventories

Inventories consist of finished goods which are valued at the lower of cost or net realizable value, with cost being determined using the first-in, first-out method as of September 27, 2020.

Property and equipment, net

The components of property and equipment are as follows:


	As of
	September 27, 2020		December 31, 2019
	(In thousands)
Machinery and equipment	$	14,699	$	13,402
Software	12,657		11,945
Computer equipment	4,094		4,047
Furniture and fixtures	4,045		4,075
Leasehold improvements	8,023		8,087

Total property and equipment, gross	43,518		41,556
Accumulated depreciation and amortization	(26,686)		(20,204)
Total property and equipment, net	$	16,832	$	21,352

Depreciation and amortization expense pertaining to property and equipment was $2.2 million and $7.0 million for the three and nine months ended September 27, 2020, respectively, and $2.4 million and $6.6 million for the three and nine months ended September 29, 2019, respectively.

Intangibles, net


	As of September 27, 2020						As of December 31, 2019
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
	(In thousands)
Technology	$	9,800	$	(9,571)	$	229	$	9,800	$	(8,540)	$	1,260
Other	500		(491)		9		500		(454)		46
Total intangibles, net	$	10,300	$	(10,062)	$	238	$	10,300	$	(8,994)	$	1,306

As of September 27, 2020, the remaining weighted-average estimated useful life of intangibles was 0.2 years. Amortization of intangibles was $0.4 million and $1.1 million for the three and nine months ended September 27, 2020, respectively, and $0.4 million and $1.2 million for the three and nine months ended September 29, 2019, respectively. There was no impairment recorded for the three and nine months ended September 27, 2020 and September 29, 2019.

As of September 27, 2020, estimated amortization expense related to finite-lived intangibles for the remaining year was $0.2 million.

Goodwill

There was no change in the carrying amount of goodwill during the nine months ended September 27, 2020 and the goodwill as of December 31, 2019 and September 27, 2020 was $11.0 million.

Goodwill Impairment

The Company performs an annual assessment of goodwill at the reporting unit level on the first day of the fourth fiscal quarter and during interim periods if there are triggering events to reassess goodwill. The Company operates as one operating and reportable segment.

In the first fiscal quarter 2020, the uncertainty brought about by the COVID-19 pandemic adversely impacted the Company's stock price. The resulting impact to the Company’s market capitalization is a qualitative factor to consider when evaluating whether events or changes in circumstances indicate that it is more likely than not that a

potential goodwill impairment exists. The Company concluded that the decline in the price of its common stock as a result of the COVID-19 impact was an indicator that the Company’s goodwill might be impaired. As a result, in the first fiscal quarter of 2020, the Company performed a quantitative assessment using the discounted cash flow model ("DCF model") as of March 29, 2020. The Company estimated the fair value of the business using the DCF model, as management believes forecasted operating cash flows are the best indicator of current fair value. The assumptions used in the DCF model include weighted-average cost of capital, projected revenue based on projected revenue growth rate, projected operating expenses, income taxes as well as capital expenditures and change in working capital. Estimating the fair value of the business was a subjective process involving the use of estimates and judgments, particularly related to future cash flows, which are inherently uncertain. Based on the results of the quantitative assessment using the DCF model, as of March 29, 2020, the respective fair value was substantially in excess of the carrying amount by $94.1 million, or 53%.

The Company determined that no events occurred or circumstances changed during the three months ended September 27, 2020 that would more likely than not reduce the fair value of the Company below its carrying amount. If there is a further decline in the Company’s stock price based on market conditions and deterioration of the Company’s business, the Company may have to record a charge to its earnings for the associated goodwill impairment of up to $11.0 million.

Other non-current assets


	As of
	September 27, 2020		December 31, 2019
	(In thousands)
Non-current deferred income taxes	$	1,255	$	1,318
Deposits	122		764
Other	839		1,926
Total other non-current assets	$	2,216	$	4,008

Accrued liabilities


	As of
	September 27, 2020		December 31, 2019
	(In thousands)
Sales and marketing	$	37,767	$	53,974
Sales returns	25,193		28,817
Accrued employee compensation	9,751		11,795
Current operating lease liabilities	4,376		3,912
Warranty obligation	2,568		3,169
Freight	2,675		2,690

Other	23,697		23,043
Total accrued liabilities	$	106,027	$	127,400