Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable

3 Months Ended

Apr. 30, 2023

Contract with Customer, Liability [Abstract]

Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable

Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable

Of the beginning deferred revenue balance for the respective periods, we recognized $354 million of subscription services revenue for the three months ended April 30, 2023, and $294 million for the three months ended April 30, 2022. Professional services revenue recognized in the same periods from deferred revenue balances at the beginning of the respective periods was immaterial.

Transaction Price Allocated to the Remaining Performance Obligations

Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancellable amounts that will be invoiced and recognized as revenues in future periods. We applied the practical expedient in accordance with ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) to exclude the amounts related to professional services contracts as these contracts generally have a remaining duration of one year or less.

As of April 30, 2023, approximately $1,225 million of revenue is expected to be recognized from remaining performance obligations for subscription services contracts. We expect to recognize revenue on approximately 92% of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

Unbilled Accounts Receivable

As of January 31, 2023, unbilled accounts receivable consisted of (i) a receivable of $32 million primarily for revenue recognized for professional services performed but not yet billed and (ii) a contract asset of $50 million primarily for revenue recognized from non-cancellable, multi-year orders in which fees increase annually but for which we are not contractually able to invoice until a future period.

As of April 30, 2023, unbilled accounts receivable consisted of (i) a receivable of $33 million primarily for revenue recognized for professional services performed but not yet billed and (ii) a contract asset of $5 million primarily related to professional services performed but for which we were not contractually able to invoice until a future period.

Since February 1, 2023, our master subscription agreements that govern multi-year orders generally include a termination for convenience right for our customers, which reduced the non-cancellable term of such orders. This

resulted in a decrease to our contract asset balance from such orders. The contract asset balance from such orders was immaterial as of April 30, 2023.