REVENUE RECOGNITION REVENUE RECOGNITION

3 Months Ended

Apr. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customer [Text Block]

REVENUE RECOGNITION

We derive our revenue primarily from the licensing of our software products and related services and support based on when control of the software passes to our customers or the services are provided, in an amount that reflects the consideration we expect to be entitled to in exchange for such goods or services. Revenue is reported net of applicable sales and use tax, value-added tax and other transaction taxes imposed on the related transaction, including mandatory government charges that are passed through to our customers.

We determine revenue recognition through the following five steps:

•Identification of the contract, or contracts, with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, performance obligations are satisfied.

We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

Disaggregation of Revenue

The following table provides information about disaggregated revenue for our Customer Engagement and Cyber Intelligence segments by product revenue and service and support revenue, as well as by the recurring or nonrecurring nature of revenue for each business segment. Recurring revenue is the portion of our revenue that we believe is likely to be renewed in the future. The recurrence of these revenue streams in future periods depends on a number of factors including contractual periods and customers' renewal decisions.

For our Customer Engagement segment:

•Recurring revenue primarily consists of cloud revenue and initial and renewal support revenue.

◦Cloud revenue consists primarily of software as a service (“SaaS”) revenue with some optional managed services revenue.

◦SaaS revenue consists predominately of bundled SaaS (software with standard managed services) with some unbundled SaaS (software licensing rights sold separately from managed services and accounted for as term-based licenses). Unbundled SaaS can be deployed in the cloud either by us or a cloud partner.

◦Bundled SaaS revenue is recognized over time and unbundled SaaS revenue is recognized at a point in time. Unbundled SaaS contracts are eligible for renewal after the initial fixed term, which in most cases is between a one- and three-year time frame.

•Nonrecurring revenue primarily consists of our perpetual licenses, consulting, implementation and installation services, and training.

For our Cyber Intelligence segment:

•Recurring revenue primarily consists of initial and renewal support, subscription software licenses, and SaaS in certain limited transactions.

•Nonrecurring revenue primarily consists of our perpetual licenses, long-term projects including software customizations that are recognized over time as control transfers to the customer using a percentage-of-completion (“POC”) method, consulting, implementation and installation services, training, and hardware.

	Three Months Ended April 30, 2020						Three Months Ended April 30, 2019
(in thousands)	Customer Engagement		Cyber Intelligence		Total		Customer Engagement		Cyber Intelligence		Total
Revenue:
Product	$	33,997	$	43,287	$	77,284	$	54,002	$	50,222	$	104,224
Service and support	151,868		58,143		210,011		153,093		57,942		211,035
Total revenue	$	185,865	$	101,430	$	287,295	$	207,095	$	108,164	$	315,259
Revenue by recurrence:
Recurring revenue	$	129,070	$	56,038	$	185,108	$	123,358	$	46,817	$	170,175
Nonrecurring revenue	56,795		45,392		102,187		83,737		61,347		145,084
Total revenue	$	185,865	$	101,430	$	287,295	$	207,095	$	108,164	$	315,259

The following table provides a further disaggregation of revenue for our Customer Engagement segment.

	Three Months Ended April 30,
(in thousands)	2020		2019
Customer Engagement revenue
Recurring revenue
Bundled SaaS revenue	$	33,393	$	27,204
Unbundled SaaS revenue	5,472		6,252
Optional managed services revenue	14,132		13,629
Total cloud revenue	52,997		47,085
Support revenue	76,073		76,273
Total recurring revenue	129,070		123,358
Nonrecurring revenue
Perpetual revenue	28,525		47,602
Professional services revenue	28,270		36,135
Total nonrecurring revenue	56,795		83,737
Total Customer Engagement revenue	$	185,865	$	207,095

Contract Balances

The following table provides information about accounts receivable, contract assets, and contract liabilities from contracts with customers:

(in thousands)	April 30, 2020		January 31, 2020
Accounts receivable, net	$	308,304	$	382,435
Contract assets, net	$	62,249	$	64,961
Long-term contract assets (included in Other assets)	$	9,260	$	1,358
Contract liabilities	$	378,548	$	397,350
Long-term contract liabilities	$	40,566	$	40,565

We receive payments from customers based upon contractual billing schedules, and accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets are rights to consideration in exchange for goods or services that we have transferred to a customer when that right is conditional on something other than the passage of time. The majority of our contract assets represent unbilled amounts related to multi-year unbundled SaaS contracts and arrangements where our right to consideration is subject to the contractually agreed upon billing schedule. We expect billing and collection of a majority of our contract assets to occur within the next twelve months and asset impairment charges related to contract assets were immaterial in the three months ended April 30, 2020 and 2019. There are two customers in our Cyber Intelligence segment that accounted for a combined $47.3 million and $51.7 million of our aggregated accounts receivable and contract assets at April 30, 2020 and January 31, 2020, respectively. These amounts result from both direct and indirect contracts with governmental agencies outside of the U.S. which we believe present insignificant credit risk.

Contract liabilities represent consideration received or consideration which is unconditionally due from customers prior to transferring goods or services to the customer under the terms of the contract. Revenue recognized during the three months ended April 30, 2020 and 2019 from amounts included in contract liabilities at the beginning of each period was $139.1 million and $134.6 million, respectively.

Remaining Performance Obligations

Transaction price allocated to remaining performance obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes contract liabilities and non-cancelable amounts that will be invoiced and recognized as revenue in future periods. The majority of our arrangements are for periods of up to three years, with a significant portion being one year or less.

We elected to exclude amounts of variable consideration attributable to sales- or usage-based royalties in exchange for a license of our IP from the remaining performance obligations. The timing and amount of revenue recognition for our remaining performance obligations is influenced by several factors, including seasonality, the timing of support renewals, and the revenue recognition for certain projects, particularly in our Cyber Intelligence segment, that can extend over longer periods of time,

delivery under which, for various reasons, may be delayed, modified, or canceled. Further, we have historically generated a large portion of our business each quarter by orders that are sold and fulfilled within the same reporting period. Therefore, the amount of remaining obligations may not be a meaningful indicator of future results.

The following table provides information about remaining performance obligations for each of our operating segments:

	April 30, 2020						January 31, 2020
(in thousands)	Customer Engagement		Cyber Intelligence		Total		Customer Engagement		Cyber Intelligence		Total
RPO:
Expected to be recognized within 1 year	$	363,496	$	363,710	$	727,206	$	374,982	$	356,677	$	731,659
Expected to be recognized in more than 1 year	113,340		197,729		311,069		117,497		225,056		342,553
Total RPO	$	476,836	$	561,439	$	1,038,275	$	492,479	$	581,733	$	1,074,212