Revenue

3 Months Ended

Jan. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue

RevenueDisaggregated Revenue

The following table shows the percentage of revenue by product groups:

	Three Months Ended   January 31,
	2021		2020
EDA	55.2	%	59.0	%
IP & System Integration	35.0	%	30.6	%
Software Integrity Products & Services	9.5	%	10.3	%
Other	0.3	%	0.1	%
Total	100.0	%	100.0	%

Contract Balances

The contract assets indicated below are presented as prepaid and other current assets in the unaudited condensed consolidated balance sheets. The contract assets are transferred to receivables when the rights to invoice and receive payment become unconditional. Unbilled receivables are presented as accounts receivable, net, in the unaudited condensed consolidated balance sheets.

Contract balances are as follows:

	As of
	January 31, 2021		October 31, 2020
	(in thousands)
Contract assets	$	217,699	$	214,583
Unbilled receivables	$	49,459	$	50,932
Deferred revenue	$	1,653,039	$	1,493,113

During the three months ended January 31, 2021 and 2020, the Company recognized $574.0 million and $504.5 million, respectively, of revenue that was included in the deferred revenue balance at the beginning of the period.

Contracted but unsatisfied or partially unsatisfied performance obligations were approximately $4.6 billion as of January 31, 2021, which includes $621.6 million in non-cancellable Flexible Spending Account (FSA) commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date. The Company has elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately 52% of the contracted but unsatisfied or partially unsatisfied performance obligations as of January 31, 2021, excluding non-cancellable FSA, are expected to be recognized over the next 12 months, with the remainder recognized thereafter.

During the three months ended January 31, 2021 and 2020, the Company recognized $26.3 million and $17.9 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods.

Costs of Obtaining a Contract with Customer

The incremental costs of obtaining a contract with a customer, which consist primarily of direct sales commissions earned upon execution of the contract, are required to be capitalized under ASC 340-40 and amortized over the estimated period of which the benefit is expected to be received. As direct sales commissions paid for renewals are commensurate with the amounts paid for initial contracts, the deferred incremental costs will be recognized over the contract term. Total capitalized direct commission costs as of January 31, 2021 were $79.4 million and included in other assets in the Company’s unaudited condensed consolidated balance sheets. Amortization of these assets was $15.0 million and $13.8 million during the three months ended January 31, 2021 and 2020, respectively, and included in sales and marketing expense in the Company’s unaudited condensed consolidated statements of operations.