Incremental Costs to Obtain a Contract with a Customer

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Incremental Costs to Obtain a Contract with a Customer

The following table summarizes the deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of March 31, 2020 and December 31, 2019 (in thousands):


	March 31, 2020		December 31, 2019
Deferred costs included in prepaid and other current assets	$	43,044	$	45,009
Deferred costs included in other assets	22,980		25,698
Total deferred costs	$	66,024	$	70,707

During the three months ended March 31, 2020 and 2019, the Company recognized $14.1 million and $10.8 million, respectively, of amortization expense related to deferred commissions. During the three months ended March 31, 2020 and 2019, the Company capitalized incremental costs to obtain a contract of $10.8 million and $6.5 million, respectively. Amortization expense and capitalization related to deferred commissions is primarily included in sales and marketing expense in the consolidated statements of income.

Revenue from Contracts with Customers

The Company sells its solutions through a sales force located both domestically and abroad. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale originated. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. The following table summarizes revenue by geography included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands):


	For the Three Months Ended March 31,
	2020		2019
U.S.	$	428,930	$	418,200
International	335,372		288,308
Total revenue	$	764,302	$	706,508

While the Company sells its solutions through a geographically dispersed sales force, it manages its customer relationships in two divisions: the Web Division and the Media and Carrier Division. Customers are assigned to a division for relationship management purposes according to their predominant purchasing activity; however, customers may purchase solutions managed by the other division as well. As of January 1, 2020, the Company reassigned some of its customers between the Media and Carrier Division and the Web Division and revised historical results in order to reflect the most recent categorization and to provide a comparable view for all periods presented. As the purchasing patterns and required account expertise of customers change over time, the Company may reassign a customer's division from one to another. The following table summarizes revenue by division included in the Company’s consolidated statements of income for the three months ended March 31, 2020 and 2019 (in thousands):


	For the Three Months Ended March 31,
	2020		2019
Web Division	$	405,995	$	374,202
Media and Carrier Division	358,307		332,306
Total revenue	$	764,302	$	706,508

Most content delivery and security services sold by the Company represent obligations that are satisfied over time as the customer simultaneously receives and consumes the services provided. Accordingly, the majority of the Company's revenue is recognized over time, generally ratably over the term of the arrangement due to consistent monthly traffic commitments that expire each period. A small percentage of the Company's services are satisfied at a point in time, such as one-time professional services contracts, integration services and most license sales where the primary obligation is delivery of the license at the start of the term. In these cases, revenue is recognized at a point in time of delivery or satisfaction of the performance obligation.

During the three months ended March 31, 2020 and 2019, the Company recognized $44.2 million and $47.8 million of revenue that was included in deferred revenue as of December 31, 2019 and 2018, respectively.

As of March 31, 2020, the aggregate amount of remaining performance obligations from contracts with customers was $2.5 billion. The Company expects to recognize approximately 70% of its remaining performance obligations as revenue over the next 12 months, with the remaining recognized thereafter. Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. This consists of future committed revenue for monthly, quarterly or annual periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced in prior periods for which the related performance obligations have not been satisfied. It excludes estimates of variable consideration such as usage-based contracts with no committed contract as well as anticipated renewed contracts.