Revenue RecognitionWe generate revenue by providing software as a serv
+ice ("SaaS") solutions through on-demand subscription, on-premise per
+petual and term licenses and related software maintenance, and servic
+es. Amounts that have been invoiced are recorded in accounts receivab
+le and in deferred revenue or revenue, depending on whether the reven
+ue recognition criteria have been met. Recurring Revenue. Recurring r
+evenue, which includes SaaS revenue and maintenance revenue, is recog
+nized ratably over the stated contractual period. SaaS revenue consis
+ts of subscription fees from customers accessing our cloud-based serv
+ice offerings. Maintenance revenue consists of fees from customers pu
+rchasing licenses and receiving support for such on-premise solutions
+. We also recognize SaaS and maintenance revenue associated with cust
+omers using our solutions in excess of contracted usage ("Overages").
+ Overages are primarily attributed to SaaS products and are recorded
+in SaaS revenue in the period incurred. Revenue related to Overages w
+as immaterial for all years presented.Service and License Revenue. Se
+rvice and license revenue primarily consists of services revenue rela
+ted to training, integration and configuration services. Our professi
+onal services arrangements are generally billed on a time-and-materia
+ls basis. Time and material services are recognized as the services a
+re rendered based on inputs to the project, such as billable hours in
+curred. For fixed-fee professional services arrangements, we recogniz
+e revenue under the proportional performance method of accounting and
+ estimates the proportional performance on a monthly basis, utilizing
+ hours incurred to date as a percentage of total estimated hours to c
+omplete the project. If we do not have a sufficient basis to measure
+progress toward completion, revenue is recognized upon completion. Se
+rvice and license revenue also includes revenue from perpetual licens
+es, which is recognized upon delivery of the product, using the resid
+ual method, assuming all the other conditions for revenue recognition
+ have been met. Revenue related to perpetual licenses was immaterial
+ for all the years presented.In a limited number of arrangements with
+ non-standard acceptance criteria, we defer the revenue until the acc
+eptance criteria are satisfied. Reimbursements, including those relat
+ed to travel and out-of-pocket expenses, are included in services and
+ license revenue, and an equivalent amount of reimbursable expenses i
+s included in cost of services and license revenue. In general, recur
+ring revenue agreements are entered into for 12 to 36 months, and the
+ professional services are performed within nine months of entering i
+nto a contract with the customer, depending on the size of integratio
+n.Our SaaS agreements provide specified service level commitments, ex
+cluding scheduled maintenance. The failure to meet this level of serv
+ice availability may require us to credit qualifying customers a port
+ion of their subscription and support fees. Based on our historical e
+xperience meeting its service level commitments, we do not currently
+have any liabilities on our consolidated balance sheets for these com
+mitments.31We recognize revenue when all of the following conditions
+are met: * Persuasive evidence of an arrangement exists;* Deli
+very has occurred or services have been rendered;* The fees are fixed
+ or determinable; and * Collection of the fees is reasonably assur
+ed. If we determine that any one of the four criteria is not met, we
+will defer recognition of revenue until all the criteria are met.Mult
+iple-deliverable arrangements with on-demand subscription. For on-dem
+and subscription agreements with multiple deliverables, we evaluate e
+ach element to determine whether it represents a separate unit of acc
+ounting. We determine the best estimated selling price of each delive
+rable in an arrangement based on a selling price hierarchy of methods
+ contained in Finance Accounting Standards Board ("FASB") Accounting
+Standards Update ("ASU") No. 2009-13, Revenue Recognition (Accounting
+ Standards Codification ("ASC") Topic 605)-Multiple-Deliverable Reven
+ue Arrangements. The best estimated selling price for a deliverable i
+s based on its vendor-specific objective evidence ("VSOE"), if availa
+ble, third-party evidence ("TPE"), if VSOE is not available, or estim
+ated selling price ("ESP"), if neither VSOE nor TPE is available. Tot
+al arrangement fees are allocated to each element using the relative
+selling price method. We have currently established VSOE for most del
+iverables, except for fixed fee service arrangements and on-premise s
+oftware licenses. We considered all of the following factors to e
+stablish the ESP for fixed fee service arrangements when sold with it
+s on-demand services: the weighted average actual sales prices of pro
+fessional services sold on a stand-alone basis for on-demand services
+; average billing rates for fixed fee service agreements when sold wi
+th on-demand services, cost plus a reasonable mark-up and other facto
+rs such as gross margin objectives, pricing practices and growth stra
+tegy. Multiple-deliverable arrangements with on-premise licen
+se.
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