2. REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents our subscription and professional services revenue during the three and six months ended December 31, 2018 and 2017, respectively:


		Three Months Ended				Six Months Ended
		December 31,				December 31,
	2018			2017	2018			2017
Revenue:
SaaS	$	11,875	$	7,747	$	21,599	$	14,691
Legacy support		3,948		4,882		7,951		9,768
Total subscription		15,823		12,629		29,550		24,459
Professional services		1,881		2,769		3,855		5,514
Total revenue	$	17,704	$	15,398	$	33,405	$	29,973

The following table presents our revenue by geography. Revenue by geography is generally determined on the region of our contracting entity rather than the region of our customer. The relative proportion of our total revenues between each geographic region as presented in the table below was materially consistent across each of our operating segments’ revenues for the periods presented.


		Three Months Ended				Six Months Ended
		December 31,				December 31,
	2018			2017	2018			2017
Revenue:
North America	$	10,065	$	8,683	$	18,540	$	16,122
EMEA		7,639		6,715		14,865		13,851
Total Revenue	$	17,704	$	15,398	$	33,405	$	29,973

Contract Balances

Contract assets consist of unbilled receivables for which we have the right to consideration for completed performance obligations that have not been invoiced. Contract liabilities consist of deferred revenue for which we have an obligation to transfer services to customers and have received consideration in advance or the amount is due from customers. Once the obligations are fulfilled, then deferred revenue is recognized to revenue in the respective period.

The following table presents the changes in contract liabilities (in thousands):


	Balance as of July 1, 2018 ($)		Additions ($)		Deductions ($)		Balance as of December 31, 2018 ($)
Contract liabilities:
Deferred revenue		30,064		30,326		(31,554)		28,836
Deferred revenue, net of current portion		7,411				(1,275)		6,136

With respect to deferred revenue balances as of June 30, 2018, $9.6 million and $20.1 million was recognized to revenue during the three and six months ended December 31, 2018, respectively.

Remaining Performance Obligations

Remaining performance obligations represent contracted revenues that had not yet been recognized, and include deferred revenues, invoices that have been issued to customers but were uncollected and have not been recognized as revenues, and amounts that will be invoiced and recognized as revenues in future periods. The transaction price allocated to the remaining performance obligation is influenced by a variety of factors, including seasonality, timing of renewals, average contract terms and foreign currency rates. As of December 31, 2018, our remaining performance obligations were $66.4 million of which we expect to recognize $41.4 million and $25.0 million as revenue within one year and beyond one year, respectively.

Costs Capitalized to Obtain Revenue Contracts

We capitalize incremental costs of obtaining a non-cancelable subscription and support revenue contracts. The capitalized amounts consist primarily of sales commissions paid to our direct sales force. Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired, (ii) commissions paid to employees upon renewals of subscription and support, and (iii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees.

Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years. We determine the period of benefit by taking into consideration the historical and expected durations of our customer contracts, the expected useful lives of our technologies, and other factors. Commissions for renewal contracts relating to our cloud-based arrangements are generally deferred and then amortized on a straight-line basis over the related contractual renewal period, which is generally five years. Amortization of deferred sales commissions is included as a component of sales and marketing expenses in our condensed consolidated statements of operations.

During the three and six months ended December 31, 2018, we capitalized $324,000 and $513,000 of costs to obtain revenue contracts, respectively, and amortized $156,000 and $302,000 to sales and marketing expense, respectively. Capitalized costs to obtain revenue contracts, net were $2.6 million and $2.4 million as of December 31, 2018 and July 1, 2018, respectively.