Revenue

We adopted the new revenue recognition accounting standard, ASC 606, effective January 1, 2018 on a modified retrospective basis and applied the new standard only to contracts that were not completed contracts prior to January 1, 2018. See Note 2 for a description of our ASC 606 revenue recognition accounting policy. Financial results for 2018 are presented in compliance with the new revenue recognition standard. Historical financial results for reporting periods prior to 2018 have not been retroactively restated and are presented in conformity with amounts previously disclosed under ASC 605. This note includes additional information regarding the impacts from the adoption of the new revenue recognition standard on our financial results for 2018. This includes the presentation of financial results for 2018 under ASC 605 for comparison to the prior year. Our revenue recognition accounting policy for ASC 605 is included in Note 2.

Consolidated Balance Sheets - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard

The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our consolidated balance sheet:



	December 31, 2018									December 31, 2017
	As Reported (ASC 606)			Impacts from Adoption			Without Adoption (ASC 605)			As Reported (ASC 605)
	(in thousands)
Assets
Current assets
Cash and cash equivalents	$	653,022		$	—		$	653,022		$	627,878
Short-term investments	369,355			—			369,355			226,787
Accounts receivable, net	236,063			—			236,063			203,366
Prepaid expenses and other current assets	155,012			(121,418		)	33,594			30,514
Income taxes receivable	2,268			97			2,365			673
Total current assets	1,415,720			(121,321		)	1,294,399			1,089,218
Long-term investments	26,278			—			26,278			148,364
Property and equipment, net	94,537			—			94,537			106,753
Goodwill	42,530			—			42,530			35,083
Deferred income taxes	4,733			3,170			7,903			5,287
Other long-term assets	50,927			(34,871		)	16,056			14,090
Total assets	$	1,634,725		$	(153,022	)	$	1,481,703		$	1,398,795
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	6,652		$	—		$	6,652		$	4,448
Accrued compensation and employee-related benefits	105,155			—			105,155			96,390
Other accrued liabilities	55,896			—			55,896			37,722
Income taxes payable	2,982			(46		)	2,936			4,743
Deferred revenue	377,892			199,210			577,102			419,426
Total current liabilities	548,577			199,164			747,741			562,729
Deferred revenue	16,306			12,232			28,538			28,058
Other long-term liabilities	56,257			(1,718		)	54,539			54,385
Total liabilities	621,140			209,678			830,818			645,172
Stockholders' equity
Common stock	8			—			8			8
Additional paid-in capital	1,340,628			—			1,340,628			1,168,563
Accumulated other comprehensive loss	(11,458		)	1,902			(9,556		)	(11,991		)
Accumulated deficit	(315,593		)	(364,602		)	(680,195		)	(402,957		)
Total stockholders' equity	1,013,585			(362,700		)	650,885			753,623
Total liabilities and stockholders' equity	$	1,634,725		$	(153,022	)	$	1,481,703		$	1,398,795

Consolidated Statements of Operations - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard

The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our consolidated statement of operations:



	Year Ended December 31,
	2018									2017			2016
	As Reported (ASC 606)			Impacts from Adoption			Without Adoption (ASC 605)			As Reported (ASC 605)			As Reported (ASC 605)
	(in thousands)
Revenues
License	$	555,581		$	(57,531	)	$	498,050		$	429,204		$	481,659
Maintenance and services	599,771			(114,872		)	484,899			447,855			345,284
Total revenues	1,155,352			(172,403		)	982,949			877,059			826,943
Cost of revenues
License	21,407			(484		)	20,923			13,534			7,003
Maintenance and services	121,217			514			121,731			100,025			92,087
Total cost of revenues	142,624			30			142,654			113,559			99,090
Gross profit	1,012,728			(172,433		)	840,295			763,500			727,853
Operating expenses
Sales and marketing	593,786			26,768			620,554			517,446			476,506
Research and development	382,886			—			382,886			334,148			302,759
General and administrative	125,805			(119		)	125,686			102,871			88,149
Total operating expenses	1,102,477			26,649			1,129,126			954,465			867,414
Operating loss	(89,749		)	(199,082		)	(288,831		)	(190,965		)	(139,561		)
Other income, net	17,872			(46		)	17,826			12,266			2,134
Loss before income tax expense	(71,877		)	(199,128		)	(271,005		)	(178,699		)	(137,427		)
Income tax expense	5,165			1,068			6,233			6,861			7,022
Net loss	$	(77,042	)	$	(200,196	)	$	(277,238	)	$	(185,560	)	$	(144,449	)

Consolidated Statements of Comprehensive Loss - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard

The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our consolidated statement of comprehensive loss:



	Year Ended December 31,
	2018									2017			2016
	As Reported (ASC 606)			Impacts from Adoption			Without Adoption (ASC 605)			As Reported (ASC 605)			As Reported (ASC 605)
	(in thousands)
Net loss	$	(77,042	)	$	(200,196	)	$	(277,238	)	$	(185,560	)	$	(144,449	)
Other comprehensive income (loss), net of tax:
Foreign currency translation	(937		)	3,585			2,648			(12,920		)	950
Net unrealized loss on available-for-sale securities	(213		)	—			(213		)	(664		)	—
Comprehensive loss	$	(78,192	)	$	(196,611	)	$	(274,803	)	$	(199,144	)	$	(143,499	)

Consolidated Statements of Cash Flows - Reconciliation of the Impacts from the Adoption of the New Revenue Recognition Standard

The following schedule summarizes the impacts from the adoption of the new revenue recognition standard on our consolidated statement of cash flows:



	Year Ended December 31,
	2018									2017			2016
	As Reported (ASC 606)			Impacts from Adoption			Without Adoption (ASC 605)			As Reported (ASC 605)			As Reported (ASC 605)
	(in thousands)
Operating activities
Net loss	$	(77,042	)	$	(200,196	)	$	(277,238	)	$	(185,560	)	$	(144,449	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization expense	35,787			—			35,787			44,746			43,006
Amortization (accretion) on investments, net	(424		)	—			(424		)	359			—
Stock-based compensation expense	238,731			—			238,731			210,283			185,712
Deferred income taxes	(2,180		)	942			(1,238		)	(2,988		)	1,219
Changes in operating assets and liabilities
Accounts receivable, net	(36,519		)	—			(36,519		)	12,493			(78,197		)
Prepaid expenses and other assets	(95,347		)	91,351			(3,996		)	8,054			(18,987		)
Income taxes receivable	(1,675		)	(99		)	(1,774		)	(515		)	(56		)
Deferred revenue	56,555			108,141			164,696			123,938			116,860
Accounts payable and accrued liabilities	38,396			—			38,396			13,529			71,157
Income taxes payable	(1,586		)	(49		)	(1,635		)	2,528			997
Net cash provided by operating activities	154,696			90			154,786			226,867			177,262
Investing activities
Purchases of property and equipment	(20,446		)	—			(20,446		)	(61,823		)	(60,732		)
Business combinations, net of cash acquired	(10,947		)	—			(10,947		)	(23,966		)	(16,399		)
Purchases of investments	(285,277		)	—			(285,277		)	(421,719		)	—
Maturities of investments	262,835			—			262,835			30,630			—
Sales of investments	2,171			—			2,171			14,916			—
Net cash used in investing activities	(51,664		)	—			(51,664		)	(461,962		)	(77,131		)
Financing activities
Proceeds from issuance of common stock	44,710			—			44,710			38,856			34,356
Repurchases of common stock	(120,024		)	—			(120,024		)	(79,991		)	(20,009		)
Net cash provided by (used in) financing activities	(75,314		)	—			(75,314		)	(41,135		)	14,347
Effect of exchange rate changes on cash and cash equivalents	(2,574		)	(90		)	(2,664		)	(4,609		)	(1,661		)
Net increase (decrease) in cash and cash equivalents	25,144			—			25,144			(280,839		)	112,817
Cash and cash equivalents
Beginning of year	627,878			—			627,878			908,717			795,900
End of year	$	653,022		$	—		$	653,022		$	627,878		$	908,717

Disclosures Related to our Contracts with Customers

Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. We record assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected. These assets are recorded as contract assets rather than receivables when receipt of the consideration is conditional on something other than the passage of time. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations. These liabilities are classified as current and non-current deferred revenue.

Contract Assets and Contract Liabilities

The following table presents the activity impacting our contract assets during the year ended December 31, 2018:



	Contract Assets
	(in thousands)
Balance at December 31, 2017	$	—
Adoption of ASC 606	40,854
Contract assets transferred to receivables	(37,698		)
Additions to contract assets	102,437
Balance at December 31, 2018	$	105,593

Contract assets are included in prepaid expenses and other current assets. There were no material impairments of contract assets during the year ended December 31, 2018.

The following table presents the activity impacting our deferred revenue balances during the year ended December 31, 2018:



	Deferred Revenue
	(in thousands)
Balance at December 31, 2017	$	447,484
Adoption of ASC 606	(105,933		)
Deferred revenue recognized	(314,765		)
Additional amounts deferred	367,412
Balance at December 31, 2018	$	394,198

Assets Recognized from the Costs to Obtain our Contracts with Customers

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We amortize these deferred costs proportionate with related revenues over the benefit period, currently estimated to be four years.

The following table presents the activity impacting our deferred contract costs during the year ended December 31, 2018:



	Deferred Contract Costs
	(in thousands)
Balance at December 31, 2017	$	—
Adoption of ASC 606	25,489
Additional contract costs deferred	37,528
Amortization of deferred contract costs	(11,616		)
Balance at December 31, 2018	$	51,401

As of December 31, 2018, $16.5 million of our deferred contract costs are expected to be amortized within the next 12 months and therefore are included in prepaid expenses and other current assets. The remaining amount of our deferred contract costs are included in other long-term assets. There were no material impairments of assets related to deferred contract costs during the year ended December 31, 2018. There were no assets recognized related to the costs to fulfill contracts during the year ended December 31, 2018 as these costs were not material.

Remaining Performance Obligations

Our contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of December 31, 2018, amounts allocated to these additional contractual obligations are $240.1 million, of which we expect to recognize $191.7 million as revenue over the next 24 months with the remaining amount thereafter. These amounts include additional performance obligations that are not yet recorded in the consolidated balance sheets.