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Revenue from Contracts with Customers
6 Months Ended
Mar. 31, 2022
Revenue From Contract With Customer [Abstract]  
Revenue from Contracts with Customers

2. Revenue from Contracts with Customers

Contract Assets and Contract Liabilities

(in thousands)

 

March 31,

2022

 

 

September 30,

2021

 

Contract asset

 

$

16,162

 

 

$

12,934

 

Deferred revenue

 

$

534,681

 

 

$

497,677

 

 

As of March 31, 2022, $11.5 million of our contract assets are expected to be transferred to receivables within the next 12 months and therefore are included in other current assets. The remainder is included in other long-term assets and expected to be transferred within the next 24 months. Approximately $6.8 million of the September 30, 2021 contract asset balance was transferred to receivables during the six months ended March 31, 2022 as a result of the right to payment becoming unconditional. Additions to contract assets of approximately $10.1 million related to revenue recognized in the period, net of billings. The majority of the contract asset balance relates to two large professional services contracts with invoicing terms based on performance milestones. There were no impairments of contract assets during the six months ended March 31, 2022.

During the six months ended March 31, 2022, we recognized $357.9 million of revenue that was included in deferred revenue as of September 30, 2021 and there were additional deferrals of $394.9 million, primarily related to new billings. For subscription contracts, we generally invoice customers annually. The balance of total short- and long-term receivables as of March 31, 2022 was $726.9 million, compared to total short- and long-term receivables as of September 30, 2021 of $744.6 million.

Our multi-year, non-cancellable on-premise subscription contracts provide customers with an annual right to exchange software within the subscription with other software. As of March 31, 2022 and September 30, 2021, the total refund liability was $36.2 million and $40.3 million, respectively, primarily associated with the annual right to exchange on-premise subscription software.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. In determining the adequacy of the allowance for doubtful accounts, management specifically analyzes individual accounts receivable, historical bad debts, customer concentrations, customer credit-worthiness, current economic conditions, and accounts receivable aging trends. Our allowance for doubtful accounts on trade accounts receivable was $0.7 million as of March 31, 2022 and $0.3 million as of September 30, 2021. Uncollectible trade accounts receivable written-off and bad debt expense were immaterial in the three and six months ended March 31, 2022.

Costs to Obtain or Fulfill a Contract

We recognize an asset for the incremental costs of obtaining a contract with a customer if the benefit of those costs is expected to be longer than one year. These deferred costs are primarily related to commissions. As of March 31, 2022 and September 30, 2021, deferred costs of $40.6 million and $40.2 million, respectively, are included in other current assets and $78.0 million and $81.1 million, respectively, are included in other assets (non-current). Amortization expense related to costs to obtain a contract with a customer was $12.7 million and $24.3 million in the three and six months ended March 31, 2022, respectively, and $11.0 million and $21.4 million in the three and six months ended March 31, 2021, respectively. There were no impairments of the contract cost asset in the three and six months ended March 31, 2022 and March 31, 2021.

Remaining Performance Obligations

Our contracts with customers include transaction price amounts allocated to performance obligations that will be satisfied at a later date. As of March 31, 2022, the transaction price amounts include performance obligations of $534.7 million recorded in deferred revenue and $1,019.4 million that are not yet recorded in the Consolidated Balance Sheets. We expect to recognize approximately 83% of the total $1,554.1 million over the next 24 months, with the remaining amount thereafter.

Disaggregation of Revenue

 

(in thousands)

 

Three months ended

 

 

Six months ended

 

 

 

March 31, 2022

 

 

March 31, 2021

 

 

March 31, 2022

 

 

March 31, 2021

 

Recurring revenue(1)

 

$

452,710

 

 

$

414,845

 

 

$

857,835

 

 

$

799,803

 

Perpetual license

 

 

9,540

 

 

 

6,922

 

 

 

18,008

 

 

 

15,385

 

Professional services

 

 

42,977

 

 

 

40,018

 

 

 

87,105

 

 

 

75,648

 

Total revenue

 

$

505,227

 

 

$

461,785

 

 

$

962,948

 

 

$

890,836

 

(1)   Recurring revenue is comprised of subscription, perpetual support, SaaS, and cloud revenue.

For further disaggregation of revenue by geographic region and product group see Note 11. Segment and Geographic Information.