Revenue

We derive our revenue primarily from product revenue, which includes industrial inkjet printers, ink, and parts; productivity software; and DFEs. We also receive service revenue from printer maintenance agreements, customer support, training, software development, and consulting.

Upon the adoption of ASC 606 and ASC 340-40, we recorded a net increase to our opening balance of retained earnings of $4.7 million as of January 1, 2018, due to the cumulative effect of adoption. The adoption impact primarily related to capitalizing customer contract acquisition costs consisting of sales commissions, partially offset by an increase in deferred revenue to reflect the deferral of a significant financing component that will be recognized as interest income as payments are received over the contractual terms, and deferral of upfront setup fees that will be recognized ratably over the expected contractual terms.

The cumulative effect of applying ASC 606 and ASC 340-40 to active contracts as of the adoption date resulted in the following adjustments to the Consolidated Balance Sheet as of January 1, 2018 (in thousands):



	Reported as of December 31, 2017		ASC 606 Adjustments			As Adjusted January 1, 2018
Assets
Accounts receivable, net	$	244,416	$	102		$	244,518
Other current assets	41,799		(1,628		)	40,171
Deferred tax assets	45,083		(1,466		)	43,617
Other assets	15,504		8,062			23,566
Liabilities
Deferred revenue	55,833		(95		)	55,738
Noncurrent contingent and other liabilities	28,801		491			29,292
Stockholders’ equity:
Retained earnings	402,544		4,674			407,218

The impact of adopting ASC 606 and ASC 340-40 on our Consolidated Statement of Operations is summarized as follows (in thousands):



	Year Ended December 31, 2018
	Amounts in Accordance with ASC 606			Amounts in Accordance with ASC 605			Effect of change higher (lower)
Revenue	$	1,015,021		$	1,009,906		$	5,115
Cost of revenue	516,448			515,718			730
Gross profit	498,573			494,188			4,385
Operating expenses	478,887			479,378			(491		)
Income from operations	19,686			14,810			4,876
Interest income and other income, net	1,604			986			618
Income (loss) before income taxes	1,121			(4,373		)	5,494
Provision for income taxes	2,092			1,304			788
Net loss	(971		)	(5,677		)	4,706

The impact of adopting ASC 606 and ASC 340-40 on our Consolidated Balance Sheet as of December 31, 2018 was as follows (in thousands):



	Amounts in Accordance with ASC 606		Amounts in Accordance with ASC 605		Effect of change higher (lower)
Assets
Accounts receivable, net	$	241,841	$	236,438	$	5,403
Other current assets	44,623		46,981		(2,358		)
Deferred tax assets	39,449		41,702		(2,253		)
Other assets	37,393		28,840		8,553
Liabilities
Deferred revenue	60,547		60,837		(290		)
Noncurrent contingent and other liabilities	7,179		6,924		255
Stockholders’ equity
Retained earnings	406,247		396,867		9,380

The following table presents our disaggregated revenue by source (in thousands). Sales and usage-based taxes are excluded from revenue:



	Year Ended December 31,
	2018		2017		2016
Major Products and Service Lines:
Industrial Inkjet
Printers and parts	$	380,672	$	349,372	$	356,043
Ink, supplies, and maintenance	226,887		221,316		206,540
Productivity Software
Licenses	46,458		37,438		41,120
Professional services	30,339		29,748		27,566
Maintenance and subscriptions	91,487		89,375		83,051
Fiery
Digital front ends and related products	221,009		251,369		263,366
Maintenance and subscriptions	18,169		14,642		14,379
Total	$	1,015,021	$	993,260	$	992,065



	Industrial Inkjet		Productivity Software		Fiery		Total
Year Ended December 31, 2018
Timing of Revenue Recognition:
Transferred at a Point in Time	$	586,079	$	46,458	$	221,009	$	853,546
Transferred Over Time	21,480		121,826		18,169		161,475
Recurring/Non-Recurring:
Non-Recurring	$	380,672	$	76,797	$	221,009	$	678,478
Recurring	226,887		91,487		18,169		336,543

Year Ended December 31, 2017
Timing of Revenue Recognition:
Transferred at a Point in Time	$	548,021	$	37,438	$	251,369	$	836,828
Transferred Over Time	22,667		119,123		14,642		156,432
Recurring/Non-Recurring:
Non-Recurring	$	349,372	$	67,186	$	251,369	$	667,927
Recurring	221,316		89,375		14,642		325,333

Year Ended December 31, 2016
Timing of Revenue Recognition:
Transferred at a Point in Time	$	541,084	$	41,120	$	263,366	$	845,570
Transferred Over Time	21,499		110,617		14,379		146,495
Recurring/Non-Recurring:
Non-Recurring	$	356,043	$	68,686	$	263,366	$	688,095
Recurring	206,540		83,051		14,379		303,970

Remaining Performance Obligations

Revenue allocated to remaining performance obligations includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods (“backlog”). Remaining performance obligations were $85.5 million as of December 31, 2018, of which we expect to recognize substantially all of the revenue over the next 12 months.

Contract Balances

Timing of revenue recognition may differ from timing of invoicing to customers. Payment terms and conditions vary by contract. Deferred revenue (contract liability) represents amounts received in advance, or invoiced in advance, for product support contracts, software customer support contracts, consulting and integration projects, SaaS arrangements, or product sales. We defer these amounts when we collect or invoice the customer and then generally recognize revenue either ratably over the support contract term, upon performing the related services, under the cost-to-cost method, or in accordance with our revenue recognition policy. Revenue recognized during the year ended December 31, 2018, which was included in deferred revenue as of December 31, 2017, was $50.8 million.

Unbilled accounts receivable represents contract assets for revenue that has been recognized in advance of billing the customer, which is common for long-term contracts. Billing requirements vary by contract but are generally structured around the completion of certain development milestones. Unbilled accounts receivable as of December 31, 2017, that were transferred to accounts receivable during the year ended December 31, 2018, were $26.2 million.

The following table reflects the balances in unbilled accounts receivable and deferred revenue (in thousands):



	December 31, 2018		January 1, 2018
Unbilled accounts receivable – current	$	20,507	$	23,296
Unbilled accounts receivable – noncurrent	8,320		4,122
Deferred revenue – current	60,547		55,738
Deferred revenue – noncurrent	290		565