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2013 Annual Report
2014 Form 10-K 39
Overview of Fiscal 2014
Fiscal Year
Ended As a % of Net
Revenue
Fiscal Year
Ended As a % of Net
RevenueJanuary 31, 2014 January 31, 2013
(in millions)
Net Revenue $ 2,273.9 100% $ 2,312.2 100%
Cost of revenue 274.3 12% 238.5 10%
Gross Profit 1,999.6 88% 2,073.7 90%
Operating expenses 1,714.8 75% 1,767.8 76%
Income from Operations $ 284.8 13% $ 305.9 13%
During fiscal 2014, as compared to the prior fiscal year, net revenue decreased 2%, gross profit decreased 4%, and income
from operations decreased 7%. Contributing to the year over year impact to revenue during fiscal 2014 were decreases in
license and other revenue partially offset by increases in subscription revenue.
During the latter part of fiscal year 2014, we announced a business model transition as we began offering more flexible
license and service offerings that have ratable revenue streams. As a result, our net revenue for fiscal 2014 excluded
approximately $30 million that was deferred as a result of the our transition. The $30 million related to flexible license
arrangements with certain enterprise customers and had a particular impact on license revenue in the Americas geography and
the Architecture, Engineering and Construction ("AEC") business segment.
Negatively impacting revenue, especially within the Asia Pacific ("APAC") geography, were changes in foreign currency
rates for fiscal 2014 as compared to the prior fiscal year. In addition, our strategic decision related to our educational program
to begin granting software licenses to educational institutions in select regions and to key partners negatively impacted revenue,
especially within the Americas geography, between fiscal 2014 and the prior fiscal year.
The reasons for these changes are discussed below under the heading “Results from Operations.”
Revenue Analysis
Revenue from flagship products was 51% of total net revenue during fiscal 2014, a decrease of 11% as compared to the
prior fiscal year. Revenue from suites was 34% of total net revenue for fiscal 2014, an increase of 15% as compared to the prior
fiscal year. Revenue from new and adjacent products was 14% of total net revenue during the fiscal 2014, a decrease of 2% as
compared to fiscal 2013. We anticipate that, as our new and existing customers migrate from our stand-alone products to suites,
our revenue from suites will increase as a percentage of revenue and that our revenue from our flagship and new and adjacent
products will continue to decline as a percentage of revenue.
We rely significantly upon major distributors and resellers in both the U.S. and international regions, including Tech Data
Corporation and its global affiliates (collectively, “Tech Data”). Tech Data accounted for 24% and 23% of our consolidated net
revenue during fiscal year 2014 and 2013, respectively. We believe our business is not substantially dependent on Tech Data.
Our customers through Tech Data are the resellers and end users who purchase our software licenses and services. Should any
of the agreements between Tech Data and us be terminated for any reason, we believe the resellers and end users who currently
purchase our products through Tech Data would be able to continue to do so under substantially the same terms from one of our
many other distributors without substantial disruption to our revenue.
Operating Margin Analysis
Income from operations decreased 7% in fiscal 2014 due to a $38.3 million or 2% decrease in net revenue and a $35.8
million or 15% increase in cost of revenue partially offset by a $53.0 million or 3% decline in our operating expenses, in each
case as compared to the prior fiscal year. Our operating margin remained flat at 13% for fiscal 2014 and 2013. The increase in
cost of revenue was driven by an increase in cloud services-related expenses. Impacting the decline in operating expenses
between fiscal 2014 and 2013 was the world-wide restructuring plan ("Fiscal 2013 Plan") approved by Autodesk during the
third quarter of fiscal 2013 and the one-time stock-based compensation expense associated with the acquisition of Socialcam
during the third quarter of fiscal 2013. Partially offsetting the decline in operating expense were restructuring charges from the
world-wide restructuring plan ("Fiscal 2014 Plan") approved by Autodesk during the third quarter of fiscal 2014.