Balance Sheet Components

12 Months Ended

Oct. 01, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

5. Balance Sheet Components

The following tables show the Company’s balance sheet component details.

Accounts Receivable Allowances

The following table summarizes changes in the allowance for credit losses for fiscal 2022 and 2021, and the allowance for doubtful accounts for fiscal 2020:


	October 1, 2022			October 2, 2021			October 3, 2020
(In thousands)
Beginning balance	$	1,547		$	1,307		$	1,255
Increases		2,098			1,529			1,127
Write-offs		(901	)		(1,289	)		(1,075	)
Ending balance	$	2,744		$	1,547		$	1,307

The following table summarizes the changes in the allowance for sales incentives for fiscal 2022, 2021 and 2020:


	October 1, 2022			October 2, 2021			October 3, 2020
(In thousands)
Beginning balance	$	19,160		$	17,515		$	20,051
Charged to revenue		51,225			95,249			108,843
Utilization of sales incentive allowance		(46,812	)		(93,604	)		(111,379	)
Ending balance	$	23,573		$	19,160		$	17,515

Inventories

Inventories, net, consist of the following:


	October 1, 2022		October 2, 2021
(In thousands)
Finished goods	$	406,657	$	154,608
Components		47,631		30,522
Inventories	$	454,288	$	185,130

The Company writes down inventory as a result of excess and obsolete inventories, or when it believes that the net realizable value of inventories is less than the carrying value. As of October 1, 2022, and October 2, 2021, inventory write-downs were $8.8 million and $4.8 million, respectively.

Property and Equipment, Net

Property and equipment, net consist of the following:


	October 1, 2022			October 2, 2021
(In thousands)
Computer hardware and software	$	42,000		$	40,098
Furniture and fixtures		7,511			7,483
Tooling and production line test equipment		100,337			76,210
Leasehold improvements		49,656			49,846
Product displays		56,885			57,863
Total property and equipment		256,389			231,500
Accumulated depreciation and amortization		(170,221	)		(160,159	)
Property and equipment, net	$	86,168		$	71,341

Depreciation expense was $33.3 million, $31.8 million and $34.9 million for fiscal 2022, 2021 and 2020, respectively. During fiscal 2022, 2021 and 2020, the Company abandoned and disposed of gross fixed assets of $18.9 million, $32.9 million and $18.5 million, with accumulated depreciation of $18.8 million, $32.2 million and $14.2 million, respectively. Disposals of fixed assets were recorded in operating expenses in the consolidated statements of operations and comprehensive income (loss) and resulted in losses of $0.1 million, $0.7 million and $4.3 million for fiscal 2022, 2021 and 2020, respectively.

Goodwill

The following table presents the changes in carrying amount of goodwill for the fiscal year ended October 1, 2022:


(In thousands)
Balance as of October 2, 2021	$	15,545
Goodwill acquired		66,078
Effect of exchange rate changes on goodwill		(4,323	)
Balance as of October 1, 2022	$	77,300

Intangible Assets

As part of the acquisition of Mayht Holding BV ("Mayht"), the Company recognized $71.8 million in intangible assets related to in-process research and development activity, which is not subject to amortization for the current period. The following table reflects the changes in the net carrying amount of the components of intangible assets associated with the Company's acquisition activity:


	October 1, 2022
	Gross Carrying Amount		Accumulated Amortization			Impact of FX			Net Carrying Value		Weighted-Average Remaining Life
(In thousands, except weighted-average remaining life)
Tradename	$	451	$	(23	)	$	(44	)	$	384		5.50
Technology-based		34,032		(8,032	)		0			26,000		5.50
Total finite-lived intangible assets		34,483		(8,055	)		(44	)		26,384		5.50
In-process research and development and other intangible assets not subject to amortization		71,759		0			(7,079	)		64,680
Total intangible assets	$	106,242	$	(8,055	)	$	(7,123	)	$	91,064

The following table summarizes the estimated future amortization expense of the Company's intangible assets as October 1, 2022:


Fiscal years ending	Future Amortization Expense
(In thousands)
2023	$	6,176
2024		5,963
2025		3,363
2026		3,033
2027 and thereafter		7,849
Total future amortization expense	$	26,384

Accrued Expenses

Accrued expenses consisted of the following:


	October 1, 2022		October 2, 2021
(In thousands)
Accrued advertising and marketing	$	21,292	$	19,989
Accrued taxes		7,081		16,941
Accrued inventory and supply chain costs		51,011		48,672
Accrued product development		8,168		7,101
Accrued general and administrative expenses		21,634		14,243
Other accrued payables		104		1,083
Total accrued expenses	$	109,290	$	108,029

Deferred Revenue

Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the consolidated balance sheets. For the fiscal year ended October 1, 2022, deferred revenue included revenue allocated to unspecified software upgrades and cloud-based services of $73.8 million, as well as current deferred revenue related to newly launched products sold to resellers not recognized as revenue until the date of general availability was reached.

The following table presents the changes in the Company's deferred revenue balances for the fiscal years ended October 1, 2022, October 2, 2021, and October 3, 2020:


	October 1, 2022			October 2, 2021			October 3, 2020
(In thousands)
Deferred revenue, beginning of period	$	89,498		$	62,389		$	56,449
Recognition of revenue included in beginning of period deferred revenue		(41,438	)		(19,175	)		(13,052	)
Revenue deferred, net of revenue recognized on contracts in the respective period		35,410			46,284			18,992
Deferred revenue, end of period	$	83,470		$	89,498		$	62,389

The Company expects the following recognition of deferred revenue as of October 1, 2022:


	For the fiscal years ending
	2023		2024		2025		2026		2027 and Beyond		Total
(In thousands)
Revenue expected to be recognized	$	27,318	$	15,587	$	13,330	$	11,029	$	16,206	$	83,470

Other Current Liabilities

Other current liabilities consist of the following:


	October 1, 2022		October 2, 2021
(In thousands)
Reserve for returns	$	18,263	$	19,266
Short-term operating lease liabilities		10,532		10,724
Warranty liability		5,771		5,604
Other		5,083		3,950
Total other current liabilities	$	39,649	$	39,544

The following table presents the changes in the Company’s warranty liability for the fiscal years ended October 1, 2022, and October 2, 2021:


	October 1, 2022			October 2, 2021
(In thousands)
Warranty liability, beginning of period	$	5,604		$	3,628
Provision for warranties issued during the period		13,033			15,304
Settlements of warranty claims during the period		(12,866	)		(13,328	)
Warranty liability, end of period	$	5,771		$	5,604