Balance Sheet Components

Property and Equipment, net

Property and equipment consist of the following:



	January 31, 2018			July 31, 2017
	(in thousands)
Computer hardware	$	23,950		$	21,408
Purchased software	4,111			3,855
Capitalized software development costs	2,125			1,065
Furniture and fixtures	3,684			3,253
Leasehold improvements	9,395			8,251
Total property and equipment	43,265			37,832
(Less) accumulated depreciation	(27,060		)	(23,456		)
Property and equipment, net	$	16,205		$	14,376

As of January 31, 2018 and July 31, 2017, no property and equipment was pledged as collateral. Depreciation expense was $1.9 million and $1.7 million for the three months ended January 31, 2018 and 2017, respectively; and was $3.8 million and $3.3 million for the six months ended January 31, 2018 and 2017, respectively.

During the third fiscal quarter of 2017, the Company began to capitalize software development costs for technology applications that the Company will offer solely as cloud-based subscriptions. The amounts capitalized as of January 31, 2018 and July 31, 2017 were $2.1 million and $1.1 million, respectively, and primarily comprised compensation and related headcount costs for employees who were directly associated with the software development projects. During the fiscal quarter ended January 31, 2018, the first phase of the Company's technology platform became ready for its intended use and, accordingly, approximately $1.5 million in previously capitalized costs began amortization over the estimated useful life of 3 years. The Company recognized approximately $0.1 million in amortization expense in cost of revenues, license and other on the accompanying condensed consolidated statements of operations during the three and six months ended January 31, 2018. There was no such amortization during the three and six months ended January 31, 2017.

Other Assets

The Company’s other assets of $20.7 million and $20.1 million at January 31, 2018 and at July 31, 2017, respectively, include a strategic equity investment in a privately-held company of $10.7 million, which was accounted for using the cost method of accounting. Strategic investments are non-marketable equity securities, in which the Company does not have a controlling interest or the ability to exert significant influence. These investments do not have a readily determinable market value. Under the cost method of accounting, the non-marketable securities are carried at cost and are adjusted only for other-than temporary impairments, certain distributions, and additional investments. Accordingly, if the Company were to disclose the fair value of the investment, the fair value measurement would be Level 3 in the valuation hierarchy. The Company assesses the investment for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable.

As of January 31, 2018 and July 31, 2017, there were no indicators that the investment with carrying value of $10.7 million was impaired.

Goodwill and Intangible Assets

The following table presents changes in the carrying amount of goodwill for the period presented:



	(in thousands)
Goodwill, July 31, 2017	$	141,851
Acquisition - Cyence	201,079
Changes in carrying value	318
Goodwill, January 31, 2018	$	343,248

The Company’s intangible assets are amortized over their estimated useful lives. Intangible assets consist of the following:



	January 31, 2018						July 31, 2017
	(in thousands)
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Amortized intangible assets:
Acquired technology	$	93,600	$	23,900	$	69,700	$	65,200	$	14,710	$	50,490
Customer contracts and related relationships	35,700		3,666		32,034		18,000		1,683		16,317
Partner relationships	200		41		159		200		30		170
Trademarks	2,500		89		2,411		—		—		—
Order backlog	8,700		2,333		6,367		5,500		1,162		4,338
Total amortized intangible assets	$	140,700	$	30,029	$	110,671	$	88,900	$	17,585	$	71,315

Amortization expense was $7.6 million and $1.7 million for the three months ended January 31, 2018 and 2017, respectively, and was $12.4 million and $3.1 million for the six months ended January 31, 2018 and 2017, respectively. The estimated aggregate amortization expense for existing intangible assets as of January 31, 2018, based on their current useful lives, is estimated as follows:



	Future Amortization
	(in thousands)
Fiscal year ending July 31,
2018 (remainder of fiscal year)	$	15,017
2019	29,112
2020	26,834
2021	19,965
2022	11,143
Thereafter	8,600
Total future amortization expense	$	110,671

Accrued Employee Compensation

Accrued employee compensation expense consists of the following:



	January 31, 2018		July 31, 2017
	(in thousands)
Accrued bonuses	$	13,929	$	26,581
Accrued commission	1,960		5,228
Accrued vacation	11,190		10,873
Accrued salaries, payroll taxes and benefits	6,602		6,200
Total accrued employee compensation	$	33,681	$	48,882

Deferred Revenues

Deferred revenues, current and non-current, consist of the following:



	January 31, 2018		July 31, 2017
	(in thousands)
Deferred license and other revenues	$	38,921	$	23,727
Deferred maintenance revenues	45,109		47,727
Deferred services revenues	46,862		39,681
Total deferred revenues	$	130,892	$	111,135

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component during the six months ended January 31, 2018 were as follows:



	Foreign Currency Translation Adjustments			Unrealized Gain (Loss) on Available-for-Sale Securities			Total
	(in thousands)
Balance as of July 31, 2017	$	(5,630	)	$	(166	)	$	(5,796	)
Other comprehensive income (loss) before reclassification	1,428			(592		)	836
Amounts reclassified from accumulated other comprehensive loss to earnings	—			15			15
Tax effect	—			167			167
Balance as of January 31, 2018	$	(4,202	)	$	(576	)	$	(4,778	)