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REVENUE RECOGNITION | 12 Months Ended
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Dec. 31, 2019
Revenue from Contract with Customer [Abstract] |
REVENUE RECOGNITION | REVENUE RECOGNITION Effective January 1, 2018, the Company adopted the New Revenue Standard using the modified retrospective option and identified the necessary changes to its policies, processes, systems and controls. Under the modified retrospective method, the Company is applying the New Revenue Standard to all contracts not yet completed as of January 1, 2018, recognizing in beginning Accumulated deficit an adjustment for the cumulative effect of the change and providing additional disclosures comparing results to those as if the Company was still following the previous accounting standards. Under ASC 605, Revenue Recognition ("ASC 605"), the Company concluded it did not have vendor-specific objective evidence of selling price ("VSOE") for certain elements in software bundled arrangements, which resulted in revenue being recognized ratably over the longest performance period. Additionally, under ASC 606 for arrangements with certain customers that include acceptance criteria, revenue is recognized when the customer obtains control, as the Company believes acceptance is perfunctory. Under ASC 605, revenue was deferred until acceptance was received. The Company is also capitalizing incremental commission fees as a result of obtaining contracts and will amortize the asset based on the transfer of services to which the asset relates, which is approximately five years. The cumulative effect of capitalizing commission fees was not material at January 1, 2018. In connection with the adoption of ASC 606, as of January 1, 2018, the Company recorded an adjustment to decrease Accumulated deficit by $12.2 million (net of tax, which was $0 due to the full valuation allowance). The Company's typical performance obligations include the following:
Performance Obligation |  | When Performance Obligation is Typically Satisfied |  | When Payment is Typically Due
Software and Product Revenue |  |  |  |
Software licenses (perpetual or term) |  | Upon transfer of control; typically, when made available for download (point in time) |  | Generally, within 30 days of invoicing except for term licenses, which may be paid for over time
Software licenses (subscription) |  | Upon activation of hosted site (over time) |  | Generally, within 30 days of invoicing
Appliances |  | When control of the appliance passes to the customer; typically, upon delivery (point in time) |  | Generally, within 30 days of invoicing
Software upgrades |  | Upon transfer of control; typically, when made available for download (point in time) |  | Generally, within 30 days of invoicing
Customer Support Revenue |  |  |  |
Customer support |  | Ratably over the course of the support contract (over time) |  | Generally, within 30 days of invoicing
Professional Services |  |  |  |
Other professional services (excluding training services) |  | As work is performed (over time) |  | Generally, within 30 days of invoicing (upon completion of services)
Training |  | When the class is taught (point in time) |  | Generally, within 30 days of services being performed
Significant Judgments The Company's contracts with customers often include promises to transfer multiple products and services to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company typically has more than one standalone selling price ("SSP") for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP. Deferred Revenue Deferred revenue is a contract liability representing amounts collected from or invoiced to customers in excess of revenue recognized. This results primarily from the billing of annual customer support agreements where the revenue is recognized over the term of the agreement. The value of deferred revenue will increase or decrease based on the timing of invoices and recognition of revenue. Disaggregation of Revenue The Company disaggregates its revenue from contracts with customers based on the nature of the products and services and the geographic regions in which each customer is domiciled. The Company's total revenue for the years ended December 31, 2019, 2018 and 2017 was disaggregated geographically as follows:
Year ended December 31, 2019 | Product revenue |  | Service revenue (maintenance) |  | Service revenue (professional services) |  | Total revenue
United States | $ | 170,937 |  |  | $ | 133,271 |  |  | $ | 37,085 |  |  | $ | 341,293 |
Europe, Middle East and Africa | 42,262 |  |  | 43,186 |  |  | 12,279 |  |  | 97,727 |
Japan | 13,065 |  |  | 11,692 |  |  | 5,842 |  |  | 30,599 |
Other Asia Pacific | 17,552 |  |  | 16,106 |  |  | 4,879 |  |  | 38,537 |
Other | 18,214 |  |  | 29,973 |  |  | 6,768 |  |  | 54,955 |
| $ | 262,030 |  |  | $ | 234,228 |  |  | $ | 66,853 |  |  | $ | 563,111 |
Year ended December 31, 2018 | Product revenue |  | Service revenue (maintenance) |  | Service revenue (professional services) |  | Total revenue
United States | $ | 169,510 |  |  | $ | 132,282 |  |  | $ | 35,832 |  |  | $ | 337,624 |
Europe, Middle East and Africa | 37,833 |  |  | 46,856 |  |  | 11,794 |  |  | 96,483 |
Japan | 23,108 |  |  | 11,234 |  |  | 5,069 |  |  | 39,411 |
Other Asia Pacific | 30,575 |  |  | 12,321 |  |  | 4,358 |  |  | 47,254 |
Other | 17,988 |  |  | 31,273 |  |  | 7,872 |  |  | 57,133 |
| $ | 279,014 |  |  | $ | 233,966 |  |  | $ | 64,925 |  |  | $ | 577,905 |
Year ended December 31, 2017 | Product revenue |  | Service revenue (maintenance) |  | Service revenue (professional services) |  | Total revenue
United States | $ | 121,121 |  |  | $ | 75,040 |  |  | $ | 22,896 |  |  | $ | 219,057 |
Europe, Middle East and Africa | 23,352 |  |  | 17,471 |  |  | 3,742 |  |  | 44,565 |
Japan | 10,252 |  |  | 10,282 |  |  | 3,855 |  |  | 24,389 |
Other Asia Pacific | 14,693 |  |  | 5,901 |  |  | 1,952 |  |  | 22,546 |
Other | 11,701 |  |  | 6,041 |  |  | 1,643 |  |  | 19,385 |
| $ | 181,119 |  |  | $ | 114,735 |  |  | $ | 34,088 |  |  | $ | 329,942 |
The Company's product revenue from its direct sales program and from indirect sales through its channel partner program for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands):
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Indirect sales through channel program | $ | 94,639 |  |  | $ | 69,232 |  |  | $ | 43,138 |
Direct sales | 167,391 |  |  | 209,782 |  |  | 137,981 |
| $ | 262,030 |  |  | $ | 279,014 |  |  | $ | 181,119 |
The Company's product revenue from sales to enterprise customers and from sales to service provider customers for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands):
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Sales to enterprise customers | $ | 70,548 |  |  | $ | 57,534 |  |  | $ | 35,592 |
Sales to service provider customers | 191,482 |  |  | 221,480 |  |  | 145,527 |
| $ | 262,030 |  |  | $ | 279,014 |  |  | $ | 181,119 |
Revenue Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, which are contract assets, and customer advances and deposits, which are contract liabilities, in the Company's consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Completion of services and billing may occur subsequent to revenue recognition, resulting in contract assets. The Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities which are classified as deferred revenue. These assets and liabilities are reported in the Company's consolidated balance sheets on a contract-by-contract basis as of the end of each reporting period. Changes in the contract asset and liability balances during the years ended December 31, 2019 and 2018 were not materially impacted by any factors other than billing and revenue recognition. Nearly all of the Company's deferred revenue balance is related to services revenue, primarily customer support contracts. Unbilled receivables stem primarily from engagements where services have been performed; however, billing cannot occur until services are completed. In some arrangements, the Company allows customers to pay for term-based software licenses and products over the term of the software license. The Company also sells SaaS-based software under subscription arrangements, with payment terms over the term of the SaaS agreement. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables that are anticipated to be invoiced in the next twelve months are included in Accounts receivable on the Company's consolidated balance sheets. The changes in the Company's accounts receivable, unbilled receivables and deferred revenue balances for the years ended December 31, 2019 and 2018 were as follows (in thousands):
| Accounts receivable |  | Unbilled accounts receivable |  | Deferred revenue (current) |  | Deferred revenue (long-term)
Balance at January 1, 2019 | $ | 174,310 |  |  | $ | 13,543 |  |  | $ | 105,087 |  |  | $ | 17,572 |
Increase (decrease), net | (5,808 | ) |  | 10,661 |  |  | (4,681 | ) |  | 2,910 |
Balance at December 31, 2019 | $ | 168,502 |  |  | $ | 24,204 |  |  | $ | 100,406 |  |  | $ | 20,482 |
| Accounts receivable |  | Unbilled accounts receivable |  | Deferred revenue (current) |  | Deferred revenue (long-term)
Balance at January 1, 2018 | $ | 149,122 |  |  | $ | 16,034 |  |  | $ | 100,571 |  |  | $ | 14,184 |
Increase (decrease), net | 25,188 |  |  | (2,491 | ) |  | 4,516 |  |  | 3,388 |
Balance at December 31, 2018 | $ | 174,310 |  |  | $ | 13,543 |  |  | $ | 105,087 |  |  | $ | 17,572 |
The Company recognized approximately $94 million of revenue in the year ended December 31, 2019 that was recorded as deferred revenue at December 31, 2018 and approximately $84 million of revenue in the year ended December 31, 2018 that was recorded as deferred revenue at December 31, 2017. Of the Company's deferred revenue reported as long-term in its consolidated balance sheet at December 31, 2019, the Company expects that approximately $13 million will be recognized as revenue in 2021, approximately $4 million will be recognized as revenue in 2022 and approximately $3 million will be recognized as revenue in 2023 and beyond. All freight-related customer invoicing is recorded as revenue, while the shipping and handling costs that occur after control of the promised goods or services transfer to the customer are reported as fulfillment costs, a component of Cost of revenue - product in the Company's consolidated statements of operations. Deferred Commissions Cost Sales commissions earned by the Company's employees are considered incremental and recoverable costs of obtaining a contract with a customer. Under ASC 605, the costs associated with obtaining a customer contract were expensed in the period the revenue was earned. Under ASC 606, these payments have been deferred on our consolidated balance sheet and are being amortized over the expected life of the customer contract, which is five years. At December 31, 2019 and 2018, the Company had $3.6 million and $2.7 million, respectively, of deferred sales commissions capitalized. Adoption of ASC 606 Under the modified retrospective method, the Company applied ASC 606 to those contracts that were not completed as of January 1, 2018. Results for reporting periods beginning January 1, 2018 are presented under ASC 606, and prior period amounts have not been adjusted and are reported in accordance with the Company's historical accounting treatment under ASC 605. The Company recorded a net reduction to Accumulated deficit of $12.2 million (net of tax, which was $0 due to the full valuation allowance) at January 1, 2018 due to the cumulative impact of adopting ASC 606. Had the Company continued to recognize revenue under ASC 605, the Company would have recognized approximately $16 million less revenue in the year ended December 31, 2018. Incremental costs that would have been recognized had the Company continued to recognize revenue under ASC 605 would not have been material to the Company's consolidated results of operations.

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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 + Details
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