Deferred Revenue and Performance Obligations

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Deferred Revenue and Performance Obligations

Deferred Commissions

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized commensurate with the recognition of associated revenue over a period of benefit that we have determined to be three to seven years. Deferred commissions were $27.4 million and $21.9 million as of September 30, 2019, and December 31, 2018, respectively. Amortization expense was $4.4 million and $12.3 million for the three and nine months ended September 30, 2019, respectively, and $3.8 million and $10.9 million for the three and nine months ended September 30, 2018, respectively. There were no indicators of impairment in relation to the costs capitalized for the periods presented. Deferred commissions have been included with prepaid expenses for the current portion and non-current other assets for the long-term portion in the accompanying condensed consolidated balance sheets. Amortization expense related to deferred commissions is included in Selling, general and administrative expenses in the accompanying condensed consolidated statements of income.

Disaggregation of Revenue

The tables below show disaggregation of revenue into categories that reflect how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows.

Timing of Revenue Recognition

Timing of revenue recognition by revenue category during the period is as follows (in thousands):

For the three months ended September 30, 2019
	Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	21,362	$	4,017	$	25,379
Subscriptions	—		75,272		75,272
Software services	—		54,997		54,997
Maintenance	—		109,833		109,833
Appraisal services	—		6,008		6,008
Hardware and other	3,911		—		3,911
Total	$	25,273	$	250,127	$	275,400

For the nine months ended September 30, 2019
	Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	54,074	$	13,773	$	67,847
Subscriptions	—		216,022		216,022
Software services	—		160,841		160,841
Maintenance	—		316,674		316,674
Appraisal services	—		17,455		17,455
Hardware and other	18,751		—		18,751
Total	$	72,825	$	724,765	$	797,590

For the three months ended September 30, 2018
	Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	17,373	$	5,071	$	22,444
Subscriptions	—		58,699		58,699
Software services	—		48,199		48,199
Maintenance	—		96,215		96,215
Appraisal services	—		5,544		5,544
Hardware and other	4,966		—		4,966
Total	$	22,339	$	213,728	$	236,067

For the nine months ended September 30, 2018
	Products and services transferred at a point in time		Products and services transferred over time		Total
Revenues
Software licenses and royalties	$	53,697	$	13,923	$	67,620
Subscriptions	—		160,736		160,736
Software services	—		144,812		144,812
Maintenance	—		286,188		286,188
Appraisal services	—		16,470		16,470
Hardware and other	17,475		—		17,475
Total	$	71,172	$	622,129	$	693,301

Recurring Revenue

The majority of our revenue is comprised of recurring revenues from maintenance and subscriptions. Virtually all of our on-premises software clients contract with us for maintenance and support, which provides us with a significant source of recurring revenue. We generally provide maintenance and support for our on-premises clients under annual, or in some cases, multi-year contracts. The contract terms for subscription arrangements range from one to 10 years but are typically contracted for initial periods of three to five years, providing a significant source of recurring revenues on an annual basis. Non-recurring revenues are derived for all other revenue categories.

Recurring revenues and non-recurring revenues recognized during the period are as follows (in thousands):

For the three months ended September 30, 2019
	Enterprise Software		Appraisal and Tax		Corporate			Totals
Recurring revenues	$	175,836	$	9,269	$	—		$	185,105
Non-recurring revenues	73,670		16,639		(14		)	90,295
Intercompany	4,029		—		(4,029		)	—
Total revenues	$	253,535	$	25,908	$	(4,043	)	$	275,400

For the nine months ended September 30, 2019
	Enterprise Software		Appraisal and Tax		Corporate			Totals
Recurring revenues	$	505,840	$	26,856	$	—		$	532,696
Non-recurring revenues	211,460		47,298		6,136			264,894
Intercompany	11,242		—		(11,242		)	—
Total revenues	$	728,542	$	74,154	$	(5,106	)	$	797,590

For the three months ended September 30, 2018
	Enterprise Software		Appraisal and Tax		Corporate			Totals
Recurring revenues	$	146,292	$	8,622	$	—		$	154,914
Non-recurring revenues	66,183		15,003		(33		)	81,153
Intercompany	3,373		—		(3,373		)	—
Total revenues	$	215,848	$	23,625	$	(3,406	)	$	236,067

For the nine months ended September 30, 2018
	Enterprise Software		Appraisal and Tax		Corporate			Totals
Recurring revenues	$	421,222	$	25,702	$	—		$	446,924
Non-recurring revenues	199,677		41,783		4,917			246,377
Intercompany	9,696		—		(9,696		)	—
Total revenues	$	630,595	$	67,485	$	(4,779	)	$	693,301

Deferred Revenue and Performance Obligations

Total deferred revenue, including long-term, by segment is as follows (in thousands):

	September 30, 2019		December 31, 2018
Enterprise Software	$	367,416	$	327,521
Appraisal and Tax	23,224		20,018
Corporate	1,161		3,397
Totals	$	391,801	$	350,936

Changes in total deferred revenue, including long-term, were as follows (in thousands):

	September 30, 2019
Balance, beginning of period December 31, 2018	$	350,936
Deferral of revenue	691,512
Recognition of deferred revenue	(650,647		)
Balance, end of period	$	391,801

Transaction Price Allocated to the Remaining Performance Obligations

The aggregate amount of transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized ("backlog"), which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Backlog as of September 30, 2019, was $1.4 billion, of which we expect to recognize approximately 49% as revenue over the next 12 months and the remainder thereafter.