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Discontinued Operations | 12 Months Ended
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Oct. 31, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations On September 30, 2024, we completed the sale of Software Integrity business to entities controlled by funds affiliated with Clearlake Capital Group, L.P. and Francisco Partners. The aggregate consideration for the sale was $1.65 billion, comprised of (i) cash of $1.48 billion received upon closing; (ii) $121.5 million reflecting the present value of $125 million deferred consideration receivable in equal installments over five fiscal quarters beginning on January 17, 2025, subject to acceleration at our option prior to the closing of our pending acquisition of ANSYS Inc. (Ansys); (iii) $22.2 million reflecting fair value of contingent consideration of up to $475 million receivable upon the Sponsors achieving a specified rate of return in the event of one or more potential liquidity transactions; and (iv) additional consideration receivable of $27.1 million as a result of net working capital adjustments. The fair value of the contingent consideration receivable was estimated using an option pricing model to derive the likelihood of achieving the performance-based metrics. The valuation methodology includes assumptions and judgments regarding volatility, discount rates, and the expected timing of payments. As of October 31, 2024, the deferred consideration receivable and the contingent consideration receivables were recorded within the prepaid and other current assets in the consolidated balance sheets. As a result of the Software Integrity Divestiture, we derecognized net assets of $720.5 million and incurred transaction costs of $61.7 million, resulting in a pre-tax gain of $868.8 million within income from discontinued operations in the consolidated statements of income, subject to certain post-closing adjustments that are expected to be finalized in the first quarter of fiscal 2025. The financial results of the Software Integrity business are presented as income from discontinued operations, net of income taxes in our consolidated statements of income. The financial results for fiscal 2024 include the period from the beginning of year through the date of sale. The following table presents the major components of financial results of our Software Integrity business for the periods presented:
| Year Ended October 31,
| 2024 |  | 2023 |  | 2022
| (in thousands)
Revenue | $ | 468,720 |  |  | $ | 524,605 |  |  | $ | 465,828 |
Cost of revenue | 153,081 |  |  | 191,350 |  |  | 165,684 |
Operating expenses | 265,029 |  |  | 337,235 |  |  | 286,820 |
Interest and other income (expense), net | 2,003 |  |  | 292 |  |  | (1,262) |
Income (loss) from discontinued operations | 52,613 |  |  | (3,688) |  |  | 12,062 |
Gain on Software Integrity Divestiture | 868,830 |  |  | — |  |  | — |
Income (loss) from discontinued operations before income taxes | 921,443 |  |  | (3,688) |  |  | 12,062 |
Income tax provision (benefit) | 99,773 |  |  | (6,531) |  |  | (2,307) |
Income from discontinued operations, net of income taxes | $ | 821,670 |  |  | $ | 2,843 |  |  | $ | 14,369 |
The following table represents the aggregated carrying amounts of classes of assets and liabilities that are classified as discontinued operations in the consolidated balance sheets for the periods presented:
|  |  | As of October 31, 2023
|  |  | (in thousands)
Assets: |  |  |
Cash and cash equivalents |  |  | $ | 4,947 |
Accounts receivable, net |  |  | 90,307 |
Prepaid and other current assets |  |  | 19,400 |
Total current assets of discontinued operations |  |  | $ | 114,654 |
Property and equipment, net |  |  | $ | 7,424 |
Operating lease right-of use assets, net |  |  | 8,906 |
Goodwill |  |  | 724,271 |
Intangible assets, net |  |  | 134,617 |
Deferred income taxes |  |  | 7,388 |
Other long-term assets |  |  | 26,153 |
Total long-term assets of discontinued operations |  |  | $ | 908,759 |
Liabilities: |  |  |
Accounts payable and accrued liabilities |  |  | $ | 63,847 |
Operating lease liabilities |  |  | 5,858 |
Deferred revenue |  |  | 216,539 |
Total current liabilities of discontinued operations |  |  | $ | 286,244 |
Long-term operating lease liabilities |  |  | $ | 4,349 |
Long-term deferred revenue |  |  | 24,301 |
Other long-term liabilities |  |  | 4,607 |
Total long-term liabilities of discontinued operations |  |  | $ | 33,257 |
The following table presents significant non-cash items and capital expenditures of discontinued operations for the periods presented:
| Year Ended October 31,
| 2024 |  | 2023 |  | 2022
| ( in thousands)
Amortization and depreciation | $ | 16,317 |  |  | $ | 51,971 |  |  | $ | 44,173 |
Reduction of operating lease right-of-use assets | $ | 2,162 |  |  | $ | 5,120 |  |  | $ | 4,898 |
Amortization of capitalized costs to obtain revenue contracts | $ | 25,051 |  |  | $ | 30,071 |  |  | $ | 23,090 |
Stock-based compensation | $ | 34,381 |  |  | $ | 50,198 |  |  | $ | 37,280 |
Deferred income taxes | $ | (31,679) |  |  | $ | (3,136) |  |  | $ | (599) |
Purchases of property and equipment | $ | 1,487 |  |  | $ | 3,232 |  |  | $ | 3,610 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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