Contract Balances

6 Months Ended

Jul. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue and Performance Obligations

Subscription revenue is recognized over time and accounted for approximately 94% and 95% for the three months ended July 31, 2019 and 2018, and 94% and 95% of our revenue for the six months ended July 31, 2019 and 2018.

The typical subscription term is one to three years. Most of our subscription contracts are noncancelable over the contractual term. Customers typically have the right to terminate their contracts for cause, if we fail to perform. As of July 31, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $628.6 million, which consists of both billed and unbilled consideration that we expect to recognize as subscription revenue. We expect to recognize 53% of the transaction price in the twelve months following July 31, 2019, in our consolidated statement of operations and comprehensive loss with the remainder recognized thereafter.

We elected to apply the practical expedient to not disclose the transaction price allocated to remaining performance obligations for contracts with a contract term of one year or less. In addition, we do not disclose the transaction price related to revenue from professional services, training services and web revenue as revenue from these sources is recognized within one year.

Contract Balances

Contract assets represent amounts for which we have recognized revenue, pursuant to our revenue recognition policy, for contracts that have not yet been invoiced to our customers where there is a remaining performance obligation, typically for multi-year arrangements. Total contract assets were $16.8 million and $11.9 million as of July 31, 2019 and January 31, 2019, of which $1.3 million was noncurrent and included within "Other assets—noncurrent" on our consolidated balance sheets as of both periods. The change in contract assets reflects the difference in timing between our satisfaction of remaining performance obligations and our contractual right to bill our customers.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are generally recognized as revenue over the contractual period. For the six months ended July 31, 2019 and 2018, we recognized revenue of $265.7 million and $157.3 million that was included in the corresponding contract liability balance at the beginning of the periods presented.

We receive payments from customers based upon contractual billing schedules. We record accounts receivable when the right to consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 days.

Deferred Contract Acquisition and Fulfillment Costs

The following table represents a rollforward of our deferred contract acquisition costs:



	Six Months Ended July 31,
(in thousands)	2019			2018
Beginning balance	$	115,985		$	77,344
Additions to deferred contract acquisition costs	39,879			29,662
Amortization of deferred contract acquisition costs	(26,929		)	(18,223		)
Cumulative translation adjustment	(1,394		)	—
Ending balance	$	127,541		$	88,783



	July 31,
(in thousands)	2019		2018
Deferred contract acquisition costs, current	$	3,107	$	2,584
Deferred contract acquisitions costs, noncurrent	124,434		86,199
Total	$	127,541	$	88,783

The following table represents our contract fulfillment costs, which include third-party service fees:



	Six Months Ended July 31,
(in thousands)	2019			2018
Beginning balance	$	3,432		$	3,316
Additions to deferred contract fulfillment costs	8,560			677
Amortization of deferred contract fulfillment costs	(4,220		)	(923		)
Ending balance	$	7,772		$	3,070



	July 31,
(in thousands)	2019		2018
Deferred contract fulfillment costs, current	$	4,600	$	913
Deferred contract fulfillment costs, noncurrent	3,172		2,157
Total	$	7,772	$	3,070

Current deferred contract acquisition and fulfillment costs are included in "Prepaid expense and other current assets" and noncurrent costs are included in "Other assets—noncurrent" on our consolidated balance sheets.