Revenue

12 Months Ended

Oct. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Disaggregated Revenue

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

	Year Ended October 31,
	2023		2022		2021
EDA	62.9	%	62.9	%	63.6	%
Design IP	26.4	%	25.9	%	25.1	%
Software Integrity	9.0	%	9.2	%	9.4	%
Other	1.7	%	2.0	%	1.9	%
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 are as follows:

	As of October 31,
	2023		2022
	(in thousands)
Contract assets, net	$	389,042	$	260,498
Unbilled receivables	$	60,016	$	46,254
Deferred revenue	$	1,951,128	$	2,065,294

During fiscal 2023, we recognized revenue of $1.7 billion, including previously unfulfilled contracts that have expired and are no longer subject to an implied promise to provide future services, that was included in the deferred revenue balance as of October 31, 2022. During fiscal 2022, we recognized revenue of $1.2 billion that was included in the deferred revenue balance as of October 31, 2021.

Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) were approximately $8.6 billion as of October 31, 2023, which includes $1.4 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 October 31, 2023, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months. The majority of the remaining backlog is expected to be recognized in the following three years. The backlog was approximately $7.1 billion as of October 31, 2022, which included $1.1 billion in non-cancellable FSA commitments from customers.

During fiscal 2023 and 2022, we recognized $99.3 million and $137.3 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, 2023 and 2022 were $88.6 million and $96.5 million, respectively. The balances are included in other long-term assets in our consolidated balance sheets. Amortization of these assets were $82.2 million, $73.0 million and $64.7 million during fiscal 2023, 2022 and 2021, respectively, and are included in sales and marketing expense in our consolidated statements of income.