Revenue

12 Months Ended

Oct. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Disaggregated Revenue

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

	2022		2021		2020
EDA	50.8	%	55.5	%	57.4	%
IP & System Integration	39.3	%	34.8	%	32.6	%
Software Integrity Products & Services	9.2	%	9.4	%	9.7	%
Other	0.7	%	0.3	%	0.3	%
Total	100.0	%	100.0	%	100.0	%

Contract Balances

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

Contract balances were as follows:

	As of October 31,
	2022		2021
	(in thousands)
Contract assets, net	$	260,498	$	284,574
Unbilled receivables	$	46,254	$	35,589
Deferred revenue	$	2,065,294	$	1,653,926

During fiscal 2022, we recognized $1.2 billion of revenue that was included in the deferred revenue balance as of October 31, 2021. During fiscal 2021, we recognized $1.2 billion of revenue that was included in the deferred revenue balance as of October 31, 2020.

Contracted but unsatisfied or partially unsatisfied performance obligations were approximately $7.1 billion as of October 31, 2022, which includes $1.1 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 44% of the contracted but unsatisfied or partially unsatisfied performance obligations as of October 31, 2022, excluding non-cancellable FSA, are expected to be recognized over the next 12 months with the remainder recognized thereafter.

During fiscal 2022 and fiscal 2021, we recognized $137.3 million and $116.7 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 commission earned upon execution of the contract, were capitalized in compliance with authoritative guidance, and amortized over the estimated period of which the benefit is expected to be received. As direct sales commission paid for renewals are commensurate with the amounts paid for initial contracts, the deferred incremental costs will be recognized over the contract term.

Capitalized commission costs, net of accumulated amortization, as of October 31, 2022 and 2021 were $96.5 million and $92.2 million, respectively. The balances are included in other long-term assets in our consolidated balance sheets. Amortization of these assets were $73.0 million, $64.7 million and $61.2 million, respectively, during fiscal 2022, fiscal 2021 and fiscal 2020, and are included in sales and marketing expense in our consolidated statements of income.