Balance Sheet Components

9 Months Ended

Jul. 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:


	July 1, 2023			October 1, 2022
(In thousands)
Accounts receivable	$	141,071		$	127,523
Allowance for credit losses		(2,655	)		(2,744	)
Allowance for sales incentives		(23,758	)		(23,573	)
Accounts receivable, net of allowances	$	114,658		$	101,206

Inventories

Inventories, net, consist of the following:


	July 1, 2023		October 1, 2022
(In thousands)
Finished goods	$	240,117	$	406,657
Component parts		58,029		47,631
Inventories	$	298,146	$	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 July 1, 2023, and October 1, 2022, inventory write-downs were $24.2 million and $8.8 million, respectively.

Goodwill

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


(In thousands)
Balance as of October 1, 2022	$	77,300
Effect of exchange rate changes on goodwill		4,479
Balance as of July 1, 2023	$	81,779

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:


	July 1, 2023
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation		Net Carrying Value		Weighted-Average Remaining Life
(In thousands, except weighted-average remaining life)
Trade name	$	451	$	(94	)	$	2	$	359		4.75
Technology-based		31,480		(10,114	)		—		21,366		5.03
Total finite-lived intangible assets		31,931		(10,208	)		2		21,725		5.03
In-process research and development not subject to amortization		71,759		—			254		72,013
Total intangible assets	$	103,690	$	(10,208	)	$	256	$	93,738

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


Fiscal years ending	Future Amortization Expense
(In thousands)
Remainder of fiscal 2023	$	1,493
2024		5,969
2025		3,371
2026		3,042
2027		3,026
2028 and thereafter		4,824
Total future amortization expense	$	21,725

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 $18.8 million and $21.7 million as of July 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 nine months ended July 1, 2023, were $0.9 million and $2.8 million, respectively. Accumulated amortization was $5.3 million and $2.5 million as of July 1, 2023, and October 1, 2022, respectively.

Accrued expenses

Accrued expenses consisted of the following:


	July 1, 2023		October 1, 2022
(In thousands)
Accrued advertising and marketing	$	11,096	$	21,292
Accrued taxes		15,977		7,081
Accrued inventory and supply chain costs		37,531		51,011
Accrued product development		5,469		8,168
Accrued general and administrative expenses		18,740		21,634
Other accrued payables		3,098		104
Total accrued expenses	$	91,911	$	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 July 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 July 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:


	July 1, 2023			July 2, 2022
(In thousands)
Deferred revenue, beginning of period	$	83,470		$	89,498
Recognition of revenue included in beginning of period deferred revenue		(21,049	)		(35,226	)
Revenue deferred, net of revenue recognized on contracts in the respective period		19,844			21,549
Deferred revenue, end of period	$	82,265		$	75,821

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


	For the fiscal years ending
	2023		2024		2025		2026		2027 and Beyond		Total
(In thousands)
Deferred revenue expected to be recognized	$	5,592	$	18,985	$	16,685	$	14,285	$	26,718	$	82,265

Other current liabilities

Other current liabilities consist of the following:


	July 1, 2023		October 1, 2022
(In thousands)
Reserve for returns	$	20,186	$	18,263
Short-term operating lease liabilities		5,089		10,532
Warranty liability		8,969		5,771
Other		4,356		5,083
Total other current liabilities	$	38,600	$	39,649

The following table presents the changes in the Company’s warranty liability:


	July 1, 2023			July 2, 2022
(In thousands)
Warranty liability, beginning of period	$	5,771		$	5,604
Provision for warranties issued during the period		10,670			9,191
Settlements of warranty claims during the period		(7,472	)		(7,367	)
Warranty liability, end of period	$	8,969		$	7,428

Leases

On May 11, 2023, the Company amended its existing operating lease at the Lafayette City Center in Boston, Massachusetts. The effect of the modification was a partial reduction in the square footage of the lease and an extension of the lease term through July 2035. The modification resulted in the Company continuing to classify the lease as an operating lease, with an increase in right-of-use assets and lease liabilities totaling $31.6 million and $30.4 million, respectively.