Autodesk 2014 Annual Report Download - page 114

2013 Annual Report
2014 Form 10-K 40
Further discussion regarding the cost of goods sold and operating expense activities are discussed below under the
heading “Results of Operations.”
Foreign Currency Analysis
We generate a significant amount of our revenue in the U.S., Japan, Germany, the United Kingdom, and France. Our
revenue was negatively impacted by foreign exchange rate changes during fiscal 2014, as compared to the prior fiscal year. Had
applicable exchange rates from fiscal 2013 been in effect during fiscal 2014 and had we excluded foreign exchange hedge gains
and losses from fiscal 2014 (“on a constant currency basis”), net revenue would have increased 1% compared to the prior fiscal
year.
Our total spend, defined as cost of revenue plus operating expenses, during fiscal 2014 decreased 1% on an as reported
basis as compared to the prior fiscal year. Had applicable exchange rates from fiscal 2013 been in effect during fiscal 2014 and
had we excluded foreign exchange hedge gains and losses from fiscal 2014, total spend would have been minimally impacted
by foreign exchange rate changes and would have remained flat on a constant currency basis compared to the prior fiscal year.
Changes in the value of the U.S. dollar may have a significant effect on net revenue, total spend and income from
operations in future periods. We use foreign currency contracts to reduce the exchange rate effect on a portion of the net
revenue of certain anticipated transactions but do not attempt to completely mitigate the impact of fluctuations of such foreign
currency against the U.S. dollar.
Balance Sheet and Cash Flow Items
At January 31, 2014, we had $2,544.4 million in cash and marketable securities. We completed fiscal 2014 with a higher
deferred revenue balance and a lower accounts receivable balance as compared to the prior fiscal year. Our deferred revenue
balance at January 31, 2014 included $789.3 million of deferred subscription revenue primarily related to customer
maintenance contracts, which will be recognized as revenue ratably over the life of the contracts. The term of our maintenance
contracts is typically between one and three years. Our cash flow from operations increased 1% to $563.5 million as of
January 31, 2014 from $559.1 million at January 31, 2013. We repurchased 10.5 million shares of our common stock for $423.8
million during fiscal 2014. Comparatively, we repurchased 12.5 million shares of our common stock for $431.2 million during
fiscal 2013. Further discussion regarding the balance sheet and cash flow activities are discussed below under the heading
“Liquidity and Capital Resources.”
Business Outlook
Autodesk's business model is evolving. We continue to assess current business offerings including introducing more
flexible license and service offerings that have ratable revenue streams. The accounting impact of these offerings and other
business decisions are expected to result in an increase in the percentage of our ratable revenue, making for a more predictable
business over time, while correspondingly reducing our upfront perpetual revenue stream. Over time, we expect our business
model transition to expand our customer base by eliminating higher up-front licensing costs and providing more flexibility with
how customers use our products. However, we expect the business model transition to cause our traditional upfront perpetual
license revenue to decline without a corresponding decrease in expenses. In the future, we expect this business model transition
will increase our long-term revenue growth rate by increasing the annual value per subscription and increasing our subscription
base over time.
We expect net revenue for the first quarter of fiscal 2015 will range from $560 million to $575 million, and that GAAP
diluted earnings per share will range from $0.01 to $0.04 while non-GAAP diluted earnings per share will range from $0.19 to
$0.22. Non-GAAP earnings per diluted share exclude $0.11 related to stock-based compensation expense, $0.06 related to the
amortization of acquisition related intangibles and $0.01 related to restructuring charges.
We expect net billings for fiscal 2015 to increase by approximately 5% to 8% compared to fiscal 2014.We expect net
revenue for fiscal 2015 to increase by approximately 3% to 5% compared to fiscal 2014. Autodesk anticipates fiscal 2015
GAAP operating margin to be approximately 5% to 8% and non-GAAP operating margin to be approximately 14% to 16%.
The 14% non-GAAP operating margin excludes 6 percentage points related to stock-based compensation expense, and 3
percentage points related to the amortization of acquisition related intangibles. The 16% non-GAAP operating margin excludes
5 percentage points related to stock-based compensation expense, and 3 percentage points related to the amortization of
acquisition related intangibles. Autodesk expects to add approximately 150,000-200,000 net new subscriptions.