Autodesk 2008 Annual Report Download - page 113

During fiscal 2008, we made changes to our Partner Incentive Programs to incent our value-added resellers
to shift their focus to selling 2D vertical products and 3D model-based design products. These new programs,
which are accounted for as a reduction to net revenue, drive a consistent treatment of incentives around the world
by further reallocating incentives from our 2D horizontal products, AutoCAD and AutoCAD LT, to 2D vertical
and 3D model-based design products. We believe that changes to our Partner Incentive Programs are having the
intended effect of shifting our resellers’ focus to selling 2D vertical and 3D model-based design products.
Revenue from the sale of new seats increased 19% from fiscal 2007 to fiscal 2008. The increase is due to an
18% increase in revenue from new seats of our 2D products, primarily AutoCAD LT, AutoCAD, AutoCAD
Mechanical and AutoCAD Architecture. The increase was also due to a 30% increase in revenue from new seats
of our 3D model-based design products (Revit products, Autodesk Inventor products, AutoCAD Civil 3D, and
NavisWorks software). The increase in new seat revenue was driven primarily by higher average sales prices per
seat and volume growth in both our 2D design and 3D model-based design products.
The positive effect of the weaker value of the U.S. dollar relative to foreign currencies also contributed to
the increase in total net revenue in fiscal 2008 as compared to fiscal 2007. In addition, we experienced growth in
net revenue in all three of our geographic regions and strong growth in the emerging economies of Europe,
Middle East, Africa and Asia Pacific.
Upgrade revenue, which includes crossgrade revenue, decreased by 17% during fiscal 2008 as compared to
the prior fiscal year, as expected. The decrease in upgrade revenue was driven primarily from the relatively
smaller size of the upgradeable base of our AutoCAD-based products in fiscal 2008 as compared to the
upgradeable base of our AutoCAD-based products in fiscal 2007, due to more customers on our Subscription
Program. In addition, during the second half of fiscal 2008 and fiscal 2007, AutoCAD LT customers could
crossgrade to any other product at a promotional rate, which contributed approximately $9.1 million to upgrade
revenue in fiscal 2008 as compared to $21.4 million in fiscal 2007. We expect revenue from upgrades to continue
to decline as we continue to execute on our strategy of moving customers to our Subscription Program.
Revenue from the sales of services, training and support, included in “License and other,” are immaterial for
all periods presented.
Maintenance Revenue
Maintenance revenue consists of revenue derived from our Subscription Program. Under this program,
customers are eligible to receive unspecified upgrades when-and-if-available, downloadable training courses and
online support. We recognize maintenance revenue from our Subscription Program ratably over the maintenance
contract periods. Maintenance revenue increased 31% for fiscal 2008 as compared to the prior fiscal year. As a
percentage of total net revenue, maintenance revenue was 25% for fiscal 2008, 23% for fiscal 2007, and 18% for
fiscal 2006. Our Subscription Program, available to most customers worldwide, continues to attract new and
renewal customers by providing them with a cost effective and predictable budgetary option to obtain the
productivity benefits of our new product releases and enhancements. We expect maintenance revenue to continue
to increase both in absolute dollars and as a percentage of total net revenue as a result of increased Subscription
Program enrollment, which is now at nearly 1.5 million users; however, we expect these growth rates to be lower
than in the past. This shift away from upgrades toward a more predictable and sustainable maintenance revenue
stream from the Subscription Program is consistent with our long-term strategy.
Due to the increase in our subscription base over time, the relative upgradeable installed base of the
AutoCAD-based products not on subscription during fiscal 2008 was smaller than the upgradeable installed base
of the AutoCAD-based products not on subscription during fiscal 2007. Maintenance revenue from subscriptions
substantially exceeded revenue from upgrades in fiscal 2008.
Aggregate backlog at January 31, 2008 and January 31, 2007 was $521.5 million and $395.8 million,
respectively, of which $506.1 million and $378.8 million represented deferred revenue and $15.4 million and
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2008 Annua
l Report