Balance Sheet Components

Property and Equipment, net

Property and equipment consist of the following:



	July 31, 2018			July 31, 2017
	(in thousands)
Computer hardware	$	24,879		$	21,408
Purchased software	4,664			3,855
Capitalized software development costs	3,978			1,065
Furniture and fixtures	4,217			3,253
Leasehold improvements	10,751			8,251
Total property and equipment	48,489			37,832
Less accumulated depreciation	(29,894		)	(23,456		)
Property and equipment, net	$	18,595		$	14,376

As of July 31, 2018 and 2017, no property and equipment was pledged as collateral against borrowings. Amortization of leasehold improvements is included in depreciation expense. Depreciation expense was $7.7 million, $6.6 million and $6.5 million for the years ended July 31, 2018, 2017 and 2016, respectively.

During the third fiscal quarter of fiscal year 2017, the Company began to capitalize software development costs for technology applications that the Company will offer solely as cloud-based subscriptions. The amount capitalized as of July 31, 2018 and 2017 was $4.0 million and $1.1 million, respectively, primarily comprised of compensation and related headcount costs for employees who were directly associated with the software development projects. During the fiscal year ended July 31, 2018, the Company began to amortize the technology applications that were ready for their intended use. The Company recognized approximately $0.4 million in amortization expense in cost of revenue, license and other on the accompanying consolidated statements of operations during the fiscal year ended July 31, 2018. There was no such amortization during the fiscal years ended July 31, 2017 and 2016.

Other Assets

The Company’s other assets of $22.5 million and $20.1 million at July 31, 2018 and 2017, respectively, include the strategic equity investment in a privately-held company, 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 July 31, 2018 and 2017, there were no indicators that the strategic equity investment with carrying value of $10.7 million was impaired.

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill for the periods presented is as follows (in thousands):



Goodwill - July 31, 2016	$	30,080
FirstBest Acquisition	15,434
ISCS Acquisition	96,337
Goodwill - July 31, 2017	$	141,851
Cyence Acquisition	198,929
Changes in carrying value	97
Goodwill - July 31, 2018	$	340,877

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



	July 31, 2018						July 31, 2017
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
	(in thousands)
Intangible assets:
Acquired technology	$	93,600	$	34,189	59,411		$	65,200	$	14,710	$	50,490
Customer contracts and related relationships	35,700		6,633		29,067		18,000		1,683		16,317
Partner relationships	200		52		148		200		30		170
Trademarks	2,500		268		2,232		—		—		—
Order backlog	8,700		3,904		4,796		5,500		1,162		4,338
Total	$	140,700	$	45,046	$	95,654	$	88,900	$	17,585	$	71,315

Amortization expense was $27.5 million, $12.1 million and $2.3 million during the years ended July 31, 2018, 2017 and 2016, respectively. The estimated future aggregate amortization expense for existing intangible assets as of July 31, 2018, based on their current useful lives, is as follows (in thousands):



Fiscal year ending July 31,
2019	$	29,112
2020	26,834
2021	19,965
2022	11,143
2023	3,799
Thereafter	4,801
Total future amortization expense	$	95,654

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts consists of the following (in thousands):



Allowance for Doubtful Accounts as of July 31, 2017	$	—
Charges to bad debt and revenue reserves	1,062
Write-offs, net	—
Allowance for Doubtful Accounts as of July 31, 2018	$	1,062

Accrued Employee Compensation

Accrued employee compensation consists of the following:



	July 31, 2018		July 31, 2017
	(in thousands)
Accrued bonuses	$	31,273	$	26,581
Accrued commission	7,287		5,228
Accrued vacation	13,132		10,873
Accrued salaries, payroll taxes and benefits	8,443		6,200
Total	$	60,135	$	48,882

Deferred Revenue

Deferred revenue, current and non-current, consists of the following:



	July 31, 2018		July 31, 2017
Deferred revenue, current:	(in thousands)
Deferred license and other revenue	$	42,235	$	21,018
Deferred maintenance revenue	52,010		46,562
Deferred services revenue	19,893		23,663
Total deferred revenue, current	$	114,138	$	91,243
Deferred revenue, non-current	23,758		19,892
Total	$	137,896	$	111,135

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss was as follows:



	Foreign Currency Items			Unrealized gain (loss) on available-for-sale securities			Total
	(in thousands)
Balance as of July 31, 2016	$	(6,809	)	$	216		$	(6,593	)
Foreign currency translation adjustments	1,179			(465		)	714
Unrealized loss on available-for-sale securities	—			(151		)	(151		)
Tax effect	—			234			234
Balance as of July 31, 2017	(5,630		)	(166		)	(5,796		)
Foreign currency translation adjustments	(1,567		)	(596		)	(2,163		)
Unrealized loss on available-for-sale securities	—			(22		)	(22		)
Tax effect	—			233			233
Balance as of July 31, 2018	$	(7,197	)	$	(551	)	$	(7,748	)