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Revenues | 12 Months Ended
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Jun. 30, 2020
Revenue From Contract With Customer [Abstract] |
Revenues | 3. Revenues Revenue Recognition The Company accounts for revenue in accordance with ASU 2014-09, Revenue from Contracts from Customers (Topic 606), which the Company adopted on July 1, 2017, using the retrospective method. The Company derives the majority of its revenues from sales of its networking equipment, with the remaining revenues generated from SaaS and service fees primarily relating to maintenance contracts with additional revenues from professional services, and training for its products. The Company sells its products and maintenance contracts direct to customers and to partners in two distribution channels, or tiers. The first tier consists of a limited number of independent distributors that stock its products and sell primarily to resellers. The second tier of the distribution channel consists of a non-stocking distributors and value-added resellers that sell directly to end-users. Products and services may be sold separately or in bundled packages. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer products and services, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. For all of the Company’s sales and distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment for product sales. Revenues from maintenance contracts and SaaS are recognized over time as the Company’s performance obligations are satisfied. This is typically the contractual service period, which ranges from one to five years. For product sales to value-added resellers of the Company, non-stocking distributors and end-user customers, the Company generally does not grant return privileges, except for defective products during the warranty period, nor does the Company grant pricing credits. Sales taxes collected from customers are excluded from revenues. Shipping costs are included in cost of product revenues. Sales incentives and other programs that the Company may make available to these customers are considered to be a form of variable consideration and the Company maintains estimated accruals and allowances using the expected value method. There were no material changes in the current period to the estimated transaction price for performance obligations which were satisfied or partially satisfied during previous periods. Sales to stocking distributors are made under terms allowing certain price adjustments and limited rights of return (known as “stock rotation”) of the Company’s products held in their inventory. Stock rotation rights grant the distributor the ability to return certain specified amounts of inventory. Stock rotation adjustments are an additional form of variable consideration and are estimated using the expected value method based on historical return rates based on historical return rates and estimates provided by the distributors. Frequently, distributors need to sell at a price lower than the contractual distribution price in order to win business and submit rebate requests for the Company’s pre-approval prior to selling the product to a customer at the discounted price. At the time the distributor invoices its customer or soon thereafter, the distributor submits a rebate claim to the Company to adjust the distributor’s cost from the contractual price to the pre-approved lower price. After the Company verifies that the claim was pre-approved, a credit memo is issued to the distributor for the rebate claim. In determining the transaction price, the Company considers these rebate adjustments to be variable consideration. Such price adjustments are estimated using the expected value method based on an analysis of actual claims, at the distributor level over a period of time considered adequate to account for current pricing and business trends. There were no material changes in the current period to the estimated variable consideration for performance obligations which were satisfied or partially satisfied during previous periods. Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Certain of the Company’s contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling prices are determined based on the prices at which the Company separately sells these products. For items that are not sold separately, the Company estimates the stand-alone selling prices using the best estimated selling price approach. The Company’s performance obligations are satisfied at a point in time or over time as the customer receives and consumes the benefits provided. Substantially all of the Company’s product sales revenues are recognized at a point in time. Substantially all of the Company’s service and SaaS revenue is recognized over time. For revenue recognized over time, the Company uses an input measure, days elapsed, to measure progress. At June 30, 2020, the Company had $291.2 million of remaining performance obligations, which are primarily comprised of deferred maintenance and SaaS revenues. The Company expects to recognize approximately 65 percent of this amount in fiscal 2021, an additional 19 percent in fiscal 2022 and 16 percent of the balance thereafter. Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue in the consolidated balance sheets. Services provided under renewable support arrangements of the Company are billed in accordance with agreed-upon contractual terms, which are either billed fully at the inception of contract or at periodic intervals (e.g., quarterly or annually). The Company generally receives payments from its customers in advance of services being provided, resulting in deferred revenue. These liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. Revenue recognized for the years ended June 30, 2020 and 2019, that was included in the deferred revenue balance at the beginning of each period was $137.6 million and $126.7 million, respectively. Contract Costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Management expects that commission fees paid to sales representatives as a result of obtaining service contracts and contract renewals, are recoverable and therefore the Company’s consolidated balance sheets included capitalized balances in the amount of $8.1 million and $6.5 million at June 30, 2020 and 2019, respectively. Capitalized commission fees are amortized on a straight-line basis over the average period of service contracts of approximately three years, and are included in “Sales and marketing” in the accompanying consolidated statements of operations. Amortization recognized during the years ended 2020, 2019 and 2018 was $5.2 million, $3.0 million and $2.1 million, respectively. Estimated Variable Consideration. There were no material changes in the current period to the estimated variable consideration for performance obligations which were satisfied or partially satisfied during previous periods. Revenues by Category: The following tables set forth the Company’s revenues disaggregated by sales channel and geographic region based on the billing addresses of its customers (in thousands):
|  | Year Ended June 30, 2020 |
Net Revenues |  | Distributor |  |  | Direct |  |  | Total |
Americas: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 218,276 |  |  | $ | 241,493 |  |  | $ | 459,769 |
Other |  |  | 19,530 |  |  |  | 20,103 |  |  |  | 39,633 |
Total Americas |  |  | 237,806 |  |  |  | 261,596 |  |  |  | 499,402 |
EMEA: |  |  | 218,947 |  |  |  | 138,254 |  |  |  | 357,201 |
APAC: |  |  | 21,554 |  |  |  | 69,862 |  |  |  | 91,416 |
Total net revenues |  | $ | 478,307 |  |  | $ | 469,712 |  |  | $ | 948,019 |
|  | Year Ended June 30, 2019 |
Net Revenues |  | Distributor |  |  | Direct |  |  | Total |
Americas: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 259,873 |  |  | $ | 238,832 |  |  | $ | 498,705 |
Other |  |  | 22,264 |  |  |  | 20,632 |  |  |  | 42,896 |
Total Americas |  |  | 282,137 |  |  |  | 259,464 |  |  |  | 541,601 |
EMEA: |  |  | 229,223 |  |  |  | 129,104 |  |  |  | 358,327 |
APAC: |  |  | 14,598 |  |  |  | 81,263 |  |  |  | 95,861 |
Total net revenues |  | $ | 525,958 |  |  | $ | 469,831 |  |  | $ | 995,789 |
|  | Year Ended June 30, 2018 |
Net Revenues |  | Distributor |  |  | Direct |  |  | Total |
Americas: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 271,975 |  |  | $ | 219,642 |  |  | $ | 491,617 |
Other |  |  | 19,414 |  |  |  | 25,274 |  |  |  | 44,688 |
Total Americas |  |  | 291,389 |  |  |  | 244,916 |  |  |  | 536,305 |
EMEA: |  |  | 218,682 |  |  |  | 136,064 |  |  |  | 354,746 |
APAC: |  |  | 15,621 |  |  |  | 76,470 |  |  |  | 92,091 |
Total net revenues |  | $ | 525,692 |  |  | $ | 457,450 |  |  | $ | 983,142 |
Included in the above amounts are $8.9 million, $11.2 million, and $8.9 million of leasing revenues for the years ended 2020, 2019 and 2018, respectively. Concentrations The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit. The following table sets forth major customers accounting for 10% or more of the Company’s net revenues:
|  | Year Ended |  |  |  |  |
|  | June 30, 2020 |  |  | June 30, 2019 |  |  | June 30, 2018 |
Tech Data Corporation |  | 18% |  |  | 18% |  |  | 14% |
Jenne Corporation |  | 15% |  |  | 17% |  |  | 13% |
Westcon Group Inc. |  | 13% |  |  | 12% |  |  | 13% |
The following table sets forth major customers accounting for 10% or more of the Company’s accounts receivable balance:
|  | June 30, 2020 |  |  | June 30, 2019 |
Tech Data Corporation |  |  | 23 | % |  |  | 12 | %
Jenne Corporation |  |  | 25 | % |  |  | 35 | %

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 + Details
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