Balance Sheet Components

6 Months Ended

Apr. 01, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

5. Balance Sheet Components

Accounts receivable, net of allowances

Accounts receivable, net of allowances, consist of the following:


	April 1, 2023			October 1, 2022
(In thousands)
Accounts receivable	$	112,019		$	127,523
Allowance for credit losses		(3,171	)		(2,744	)
Allowance for sales incentives		(24,645	)		(23,573	)
Accounts receivable, net of allowances	$	84,203		$	101,206

Inventories

Inventories, net, consist of the following:


	April 1, 2023		October 1, 2022
(In thousands)
Finished goods	$	274,459	$	406,657
Component parts		51,830		47,631
Inventories	$	326,289	$	454,288

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 April 1, 2023, and October 1, 2022, inventory write-downs were $19.3 million and $8.8 million, respectively.

Goodwill

The following table presents the changes in carrying amount of goodwill during the six months ended April 1, 2023:


(In thousands)
Balance as of October 1, 2022	$	77,300
Effect of exchange rate changes on goodwill		4,201
Balance as of April 1, 2023	$	81,501

Intangible assets

The following table reflects the changes in the net carrying amount of the components of intangible assets associated with the Company's acquisition activity:


	April 1, 2023
	Gross Carrying Amount		Accumulated Amortization			Impact of FX			Net Carrying Value		Weighted-Average Remaining Life
(In thousands, except weighted-average remaining life)
Trade name	$	451	$	(71	)	$	(1	)	$	379		5.00
Technology-based		31,480		(8,640	)		—			22,840		5.19
Total finite-lived intangible assets		31,931		(8,711	)		(1	)		23,219		5.19
In-process research and development not subject to amortization		71,759		—			(205	)		71,554
Total intangible assets	$	103,690	$	(8,711	)	$	(206	)	$	94,773

The following table summarizes the estimated future amortization expense of the Company's intangible assets as of April 1, 2023:


Fiscal years ending	Future Amortization Expense
(In thousands)
Remainder of fiscal 2023	$	2,986
2024		5,971
2025		3,371
2026		3,041
2027		3,026
2028 and there after		4,824
Total future amortization expense	$	23,219

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are hosted by a third-party vendor. Implementation costs incurred during the application development stage are capitalized until the software is ready for its intended use. The costs are then amortized on a straight-line basis over the term of the associated hosting arrangement and are recognized as an operating expense within the condensed consolidated statements of operations and comprehensive income (loss). Beginning in fiscal 2020, and continuing through April 2022, the Company conducted activities to replace its legacy enterprise resource management system in order to accommodate the Company's expanding operations. In May 2022, the Company went live with its implementation of a new enterprise resource planning ("ERP") system. Capitalized costs, net of accumulated amortization, were $19.8 million and $21.7 million as of April 1, 2023, and October 1, 2022, respectively, and are reported as a component of other noncurrent assets on the Company's condensed consolidated balance sheets. Amortization expenses for implementation costs for cloud-based computing arrangements for three and six months ended April 1, 2023 were $1.0 million and $1.9 million, respectively. Accumulated amortization was $4.4 million and $2.5 million as of April 1, 2023, and October 1, 2022, respectively.

Accrued expenses

Accrued expenses consisted of the following:


	April 1, 2023		October 1, 2022
(In thousands)
Accrued inventory and supply chain costs	$	40,213	$	51,011
Accrued general and administrative expenses		14,811		21,634
Accrued advertising and marketing		10,982		21,292
Accrued taxes		5,076		7,081
Accrued product development		3,313		8,168
Other accrued payables		1,992		104
Total accrued expenses	$	76,387	$	109,290

Deferred revenue

Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the condensed consolidated balance sheets. Deferred revenue primarily relates to revenue allocated to unspecified software upgrades and cloud-based services. Recognition of revenue as of April 1, 2023, includes $9.2 million of deferred revenue from the fourth quarter of fiscal 2022, related to newly launched products sold to resellers not recognized as revenue until the date of general availability was reached, which was the first quarter of fiscal 2023. Recognition of revenue as of April 2, 2022, includes $18.8 million of deferred revenue from the fourth quarter of fiscal 2021, related to newly launched products sold to resellers not recognized as revenue until the date of general availability was reached, which was the first quarter of fiscal 2022.

The following table presents the changes in the Company’s deferred revenue for the six months ended April 1, 2023, and April 2, 2022:


	April 1, 2023			April 2, 2022
(In thousands)
Deferred revenue, beginning of period	$	83,470		$	89,498
Recognition of revenue included in beginning of period deferred revenue		(16,186	)		(28,927	)
Revenue deferred, net of revenue recognized on contracts in the respective period		14,443			16,063
Deferred revenue, end of period	$	81,727		$	76,634

The Company expects the following recognition of deferred revenue as of April 1, 2023:


	For the fiscal years ending
	2023		2024		2025		2026		2027 and Beyond		Total
(In thousands)
Deferred revenue expected to be recognized	$	10,391	$	18,190	$	15,892	$	13,497	$	23,757	$	81,727

Other current liabilities

Other current liabilities consist of the following:


	April 1, 2023		October 1, 2022
(In thousands)
Reserve for returns	$	15,674	$	18,263
Short-term operating lease liabilities		10,949		10,532
Warranty liability		8,993		5,771
Other		6,250		5,083
Total other current liabilities	$	41,866	$	39,649

The following table presents the changes in the Company’s warranty liability for the six months ended April 1, 2023, and April 2, 2022:


	April 1, 2023			April 2, 2022
(In thousands)
Warranty liability, beginning of period	$	5,771		$	5,604
Provision for warranties issued during the period		7,892			7,082
Settlements of warranty claims during the period		(4,670	)		(3,930	)
Warranty liability, end of period	$	8,993		$	8,756