Revenue

6 Months Ended

Aug. 03, 2019

Revenue from Contract with Customer [Abstract]

The majority of the Company's revenue is generated from sales of the Company’s products. The following table summarizes net revenue disaggregated by product group (in thousands, except percentages):



	Three Months Ended								Six Months Ended
	August 3, 2019		% of Total		August 4, 2018		% of Total		August 3, 2019		% of Total		August 4, 2018		% of Total
Net revenue by product group:
Storage (1)	$	274,905	42	%	$	335,764	50	%	$	553,572	42	%	$	652,833	51	%
Networking (2)	329,605		50	%	283,330		43	%	670,949		51	%	527,558		42	%
Other (3)	52,058		8	%	46,216		7	%	94,499		7	%	89,550		7	%
	$	656,568			$	665,310			$	1,319,020			$	1,269,941


1)	Storage products are comprised primarily of HDD, SSD Controllers, Fibre Channel Adapters and Data Center Storage Solutions.


2)	Networking products are comprised primarily of Ethernet Switches, Ethernet Transceivers, Ethernet NICs, Embedded Communications and Infrastructure Processors, Automotive Ethernet, Security Adapters and Processors as well as WiFi Connectivity products. In addition, this grouping includes a few legacy product lines in which the Company no longer invests, but will generate revenue for several years.


3)	Other products are comprised primarily of Printer Solutions, Application Processors and others.

The following table summarizes net revenue disaggregated by primary geographical market (in thousands, except percentages):



	Three Months Ended								Six Months Ended
	August 3, 2019		% of Total		August 4, 2018		% of Total		August 3, 2019		% of Total		August 4, 2018		% of Total
Net revenue based on destination of shipment:
China	$	286,310	44	%	$	292,033	44	%	$	532,444	40	%	$	566,542	45	%
United States	55,580		8	%	16,563		2	%	128,586		10	%	32,592		3	%
Philippines	60,287		9	%	55,416		8	%	122,774		9	%	113,183		9	%
Thailand	63,511		10	%	39,256		6	%	110,177		8	%	80,790		6	%
Malaysia	36,019		5	%	96,127		14	%	99,339		8	%	186,750		15	%
Japan	41,120		6	%	37,791		6	%	80,090		6	%	72,780		6	%
Other	113,741		18	%	128,124		20	%	245,610		19	%	217,304		16	%
	$	656,568			$	665,310			$	1,319,020			$	1,269,941

The following table summarizes net revenue disaggregated by customer type (in thousands, except percentages):



	Three Months Ended								Six Months Ended
	August 3, 2019		% of Total		August 4, 2018		% of Total		August 3, 2019		% of Total		August 4, 2018		% of Total
Net revenue by customer type:
Direct customers	$	484,743	74	%	$	532,351	80	%	$	999,301	76	%	$	1,002,827	79	%
Distributors	171,825		26	%	132,959		20	%	319,719		24	%	267,114		21	%
	$	656,568			$	665,310			$	1,319,020			$	1,269,941

Contract Liabilities

Contract liabilities consist of the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration or the amount is due from the customer. As of August 3, 2019, contract liability balances are comprised of variable consideration estimated based on a portfolio basis using the expected value methodology based on analysis of historical data, current economic conditions, and contractual terms. Variable consideration estimates consist of the estimated returns, price discounts, price protection, rebates, and stock rotation programs. As of the end of a reporting period, some of the performance obligations associated with contracts will have been unsatisfied or only partially satisfied. In accordance with the practical expedients available in the guidance, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. Contract liabilities are included in accrued liabilities in the condensed consolidated balance sheets.

The opening balance of contract liabilities at the beginning of the first quarter of fiscal year 2020 was $142.4 million. During the six months ended August 3, 2019, contract liabilities increased by $294.8 million associated with variable consideration estimates, offset by $314.2 million decrease in such reserves primarily due to credit memos issued to customers. The ending balance of contract liabilities as of the second quarter of fiscal year 2020 was $123.0 million. The amount of revenue recognized during the six months ended August 3, 2019 that was included in the contract liabilities balance at February 2, 2019 was not material.

Sales Commissions

The Company has elected to apply the practical expedient to expense commissions when incurred as the amortization period is typically one year or less. These costs are recorded in selling, general and administrative expenses in the condensed consolidated statements of operations.