Revenue From Contracts with Customers

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue From Contracts with Customers

2. Revenue From Contracts with Customers

The Company primarily derives revenue from subscription fees and related professional services. The Company also sells software licenses with associated maintenance and professional services based on product offerings introduced upon the acquisition of Device42 in the quarter ended June 30, 2024.

The Company sells subscriptions and software licenses directly to customers and indirectly through channel partners through arrangements that are non-cancelable and non-refundable. The Company’s subscription

arrangements do not provide customers with the right to take possession of the software supporting the solutions and, as a result, are accounted for as service arrangements.

The Company records revenue net of sales or value-added taxes.

Disaggregation of Revenue

The following table summarizes revenue by the Company’s product and service offerings (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Subscription services, software licenses and maintenance	$	171,604	$	141,699	$	334,173	$	275,722
Professional services	2,527		3,380		5,101		7,049
Total revenue	$	174,131	$	145,079	$	339,274	$	282,771

See Note 13 for revenue by geographic location.

Unbilled Receivables, Deferred Revenue and Remaining Performance Obligations

Unbilled receivables represent revenue recognized in excess of billings from non-cancellable multi-year contract arrangements. As of June 30, 2024 and December 31, 2023, the Company had $5.1 million and $0.2 million of unbilled receivables, respectively. Unbilled receivables are included within accounts receivable, net on the condensed consolidated balance sheet. Deferred revenue consists of customer billings in excess of revenue being recognized.

Revenue recognized during the three months ended June 30, 2024 and 2023 from amounts included in deferred revenue at the beginning of these periods was $127.8 million and $103.5 million, respectively. Revenue recognized during the six months ended June 30, 2024 and 2023 from amounts included in deferred revenue at the beginning of these periods was $202.3 million and $155.1 million, respectively.

The aggregate balance of remaining performance obligations as of June 30, 2024 was $469.8 million. The Company expects to recognize $341.9 million of the balance as revenue in the next 12 months and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods.

Deferred Contract Acquisition Costs

The change in the balance of deferred contract acquisition costs during the periods presented is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Balance at beginning of the period	$	43,092	$	39,626	$	42,672	$	39,675
Add: Contract costs capitalized during the period	9,830		7,188		16,902		12,756
Less: Amortization of contract costs during the period	(6,886)		(5,852)		(13,538)		(11,469)
Balance at end of the period	$	46,036	$	40,962	$	46,036	$	40,962