Revenue from Contracts with Customers (Tables)

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Impact of ASC 606 on Condensed Consolidated Financial Statement Line Items

The following table compares the impacted assets and liabilities on the consolidated balance sheet as of December 31, 2018 to the amounts had ASC 605 been in effect:

	December 31, 2018
(in thousands)	As Reported (ASC 606)		ASC 605		Change
Accounts receivable, less allowance for doubtful accounts of $8,000	$	317,700	$	135,190	$	182,510
Other receivables and current assets	216,113		351,246		(135,133		)
Other long-term assets	82,775		43,429		39,346
Deferred income tax assets	26,630		65,973		(39,343		)
Accrued income taxes	8,726		—		8,726
Other accrued expenses and liabilities	99,559		101,949		(2,390		)
Deferred revenue - current	328,584		526,168		(197,584		)
Deferred income tax liabilities	30,077		23,056		7,021
Other long-term liabilities	61,573		76,354		(14,781		)
Stockholders' equity	$	2,649,547	$	2,403,159	$	246,388

The Company recorded $244.1 million of deferred revenue to retained earnings upon the adoption of ASC 606 on January 1, 2018. The pattern of software lease license revenue recognition has changed under ASC 606. Software lease license revenue was recognized ratably over the term of the contract under the previous guidance; however, approximately 50% of the contract is recognized up front at the commencement of the lease under ASC 606. This change in the pattern of revenue recognition, coupled with the recording of deferred revenue to retained earnings at the adoption date, resulted in the changes to the consolidated balance sheet line items as noted in the table above.

The following table compares the impacted amounts on the consolidated statements of income for the year ended December 31, 2018 to the amounts had ASC 605 been in effect:

(in thousands, except per share data)	As Reported (ASC 606)		ASC 605		Change
Revenue:
Software licenses	$	576,717	$	676,846	$	(100,129	)
Maintenance and service	716,919		539,623		177,296
Cost of sales:
Software licenses	18,619		36,852		(18,233		)
Maintenance and service	110,232		91,999		18,233
Income tax provision	67,710		53,067		14,643
Earnings per share:
Basic	$	4.99	$	4.25	$	0.74
Diluted	$	4.88	$	4.15	$	0.73

The impacts to reported software licenses revenue, and maintenance and service revenue, were primarily due to the PCS portion of lease license contracts now being allocated to maintenance and service revenue under ASC 606. Under the previous guidance, this revenue was reported as software licenses revenue. This decrease to software licenses revenue was partially offset by the upfront recognition of the license component of lease revenue, which would have been recognized ratably over the contract under prior guidance. Consistent with the change in revenue, there was a corresponding reclassification within cost of sales. Costs incurred related to the PCS portion of lease license contracts are reflected in cost of maintenance and service. Under the previous guidance, such costs were reflected within cost of software licenses.

Disaggregation of Revenue

The following table summarizes revenue for the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
(in thousands)	2018 (ASC 606)		2018 (ASC 605)		2017 (ASC 605)		2016 (ASC 605)
Revenue:
Lease licenses	$	275,619	$	421,268	$	376,886	$	340,331
Perpetual licenses	301,098		255,578		248,078		227,843
Software licenses	576,717		676,846		624,964		568,174
Maintenance	676,883		499,510		440,428		394,745
Service	40,036		40,113		29,858		25,546
Maintenance and service	716,919		539,623		470,286		420,291
Total revenue	$	1,293,636	$	1,216,469	$	1,095,250	$	988,465

The Company’s software licenses revenue is recognized up front, while maintenance and service revenue is generally recognized over the term of the contract. Under ASC 606, the Company derived 22.4% of its total revenue through the indirect sales channel for the year ended December 31, 2018. Under ASC 605, the Company derived 23.5%, 24.8%, and 24.4% of its total revenue through the indirect sales channel for the years ended December 31, 2018, 2017 and 2016, respectively.

Changes in Deferred Revenue

The changes in deferred revenue during the year ended December 31, 2018, inclusive of both current and long-term, are as follows:

(in thousands)
Beginning balance – January 1	$	299,730
Acquired deferred revenue	2,470
Recognition of deferred revenue	(1,293,636		)
Deferral of revenue	1,339,964
Currency translation	(5,354		)
Ending balance – December 31	$	343,174

Remaining Performance Obligations, Expected Timing of Satisfaction

Total revenue allocated to remaining performance obligations was $659.2 million as of December 31, 2018 and will be recognized as revenue as follows:

(in thousands)
Next 12 months	$	475,883
Months 13-24	125,048
Months 25-36	43,470
Thereafter	14,771
Total revenue allocated to remaining performance obligations	$	659,172