Revenue

3 Months Ended

Jan. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Disaggregated Revenue

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

	Three Months Ended   January 31,
	2024		2023
EDA	58.9	%	64.3	%
Design IP	31.9	%	25.2	%
Software Integrity	8.4	%	9.4	%
Other	0.8	%	1.1	%
Total	100.0	%	100.0	%

Contract Balances

The contract assets indicated below are presented as prepaid and other current assets in the 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 condensed consolidated balance sheets.

Contract balances are as follows:

	As of
	January 31, 2024		October 31, 2023
	(in thousands)
Contract assets, net	$	469,002	$	389,042
Unbilled receivables	$	40,522	$	60,016
Deferred revenue	$	2,045,680	$	1,951,128

During the three months ended January 31, 2024, we recognized revenue of $846.7 million that was included in the deferred revenue balance as of October 31, 2023, including previously unfulfilled contracts that have expired and are no longer subject to an implied promise to provide future services.

Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) were approximately $8.2 billion as of January 31, 2024, which includes $1.3 billion 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. We have elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately 40% of the backlog as of January 31, 2024, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months, with the remainder recognized thereafter. The majority of the remaining backlog is expected to be recognized in the following three years.

During the three months ended January 31, 2024 and 2023, we recognized $25.4 million and $24.7 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods.

Costs of Obtaining a Contract with Customer

Capitalized commission costs, net of accumulated amortization, as of January 31, 2024 were $88.5 million and are included in other long-term assets in our condensed consolidated balance sheets. Amortization of these assets was $18.7 million and $18.9 million during the three months ended January 31, 2024 and 2023, respectively, and are included in sales and marketing expense in our condensed consolidated statements of income.