Autodesk 2014 Annual Report Download - page 119

2013 Annual Report
2014 Form 10-K 45
Cost of Revenue and Operating Expenses
Cost of Revenue
For comparability, the balances at January 31, 2013 and January 31, 2012, including tables, were adjusted to align to
current year presentation, and therefore the discussion has been updated accordingly.
Fiscal Year
Ended
January 31,
2014
Increase compared to
prior fiscal year
Fiscal Year
Ended
January 31,
2013
Increase compared to
prior fiscal year
Fiscal Year
Ended
January 31,
2012
$ % $ %
(in millions)
Cost of revenue:
License and other $ 178.7 $ 12.7 8% $ 166.0 $ (0.6) — % $ 166.6
Subscription 95.6 23.1 32% 72.5 10.0 16 % 62.5
$ 274.3 $ 35.8 15% $ 238.5 $ 9.4 4 % $ 229.1
As a percentage of net revenue 12% 10% 10%
Cost of license and other revenue includes labor costs associated with product setup and fulfillment and costs of fulfilling
consulting and training services contracts and collaborative project management services contracts. Cost of license and other
revenue also includes stock-based compensation expense, direct material and overhead charges, amortization of purchased
technology, professional services fees and royalties. Direct material and overhead charges include the cost of hardware sold
(mainly PC-based workstations for Creative Finishing in the M&E segment), costs associated with transferring our software to
electronic media, physical media, packaging materials and shipping and handling costs.
Cost of license and other revenue increased 8% during fiscal 2014, as compared to fiscal 2013, primarily due to an
increase in consulting support costs. Cost of license and other revenue remained flat during fiscal 2013, as compared to fiscal
2012, primarily due to a decrease in Creative Finishing related expenses, consistent with the decline in Creative Finishing
revenue, offset by an increase in stock-based compensation charges and amortization of acquisition related developed
technologies.
Cost of subscription revenue includes the labor costs of providing product support to our maintenance and cloud
subscription customers, including rent and occupancy, shipping and handling costs, professional services fees related to
operating our network infrastructure, including depreciation expense and operating lease payments associated with computer
equipment, data center costs, salaries and related expenses of network operations. Cost of subscription revenue increased 32%
during fiscal 2014 as compared to fiscal 2013 primarily due to an increase in cloud services-related expenses. Cost of
subscription revenue increased 16% during fiscal 2013 as compared to fiscal 2012 due to an increase in cloud services-related
expenses partially offset by decrease in costs as a result of the move to more electronic fulfillment.
Cost of revenue, at least over the near term, is affected by the volume and mix of product sales, mix of physical versus
electronic fulfillment, fluctuations in consulting costs, amortization of purchased technology, new customer support offerings,
royalty rates for licensed technology embedded in our products and employee stock-based compensation expense.
We expect cost of revenue to increase in absolute dollars and slightly increase as a percentage of net revenue during fiscal
2015, as compared to fiscal 2014, primarily due to an increase in costs associated with meeting our major business initiatives.