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Table of Contents
Foreign Currency
Although approximately 70% of our sales are denominated in the U.S. dollar, we also invoice and collect in the euro, the British pound, the
Japanese yen, the Australian dollar and the Chinese renminbi in their respective regions. As a result, a portion of our total revenues are affected
by changes in the value of the U.S. dollar against these currencies. Transactions denominated in foreign currency are converted to the U.S. dollar
upon booking of the transaction using the monthly exchange rate. Although the U.S. dollar strengthened against most foreign currencies during
the fourth quarter of 2014, foreign currency fluctuations did not have a material impact when comparing license revenues in 2014 and 2013 to
their respective prior years. However, even if currency exchange rates stabilize, we would still anticipate a negative impact both on our license
and total revenue growth rates in 2015.
Unearned Revenues
Our unearned revenues as of December 31, 2014 and December 31, 2013 were as follows:
Unearned license revenues are generally recognized upon delivery of existing or future products or services, or they are otherwise
recognized ratably over the term of the arrangement. Future products include, in some cases, emerging products that are offered as part of
product promotions where the purchaser of an existing product is entitled to receive the future product at no additional charge. To the extent the
future product has not been delivered and vendor-specific objective evidence (“VSOE”) of fair value cannot be established, the revenue for the
entire order is deferred until such time as all product delivery obligations have been fulfilled. In the event the arrangement does not include
professional services, unearned license revenue may also be recognized ratably, if the customer is granted the right to receive unspecified future
products or VSOE of fair value on the software maintenance element of the arrangement does not exist. Total unearned license revenues may
vary over periods for a variety of factors, including the type and level of promotions offered, and the timing of when the products are delivered
upon general availability.
Unearned software maintenance revenues are primarily attributable to our maintenance contracts and are generally recognized ratably over
the contract period. The weighted-average remaining term at December 31, 2014 was approximately 2 years . Unearned professional services
revenues result primarily from prepaid professional services, including training, and are generally recognized as the services are delivered.
Cost of License and Services Revenues, and Operating Expenses
Our cost of services revenues and operating expenses were primarily impacted by increasing headcount. Headcount during the year ended
December 31, 2014 continued to increase due primarily to organic growth and the AirWatch acquisition. The increased headcount has resulted in
higher cash and stock-based employee-related expenses across most of our income statement expense categories when compared to the same
periods in 2013, and we expect this trend to continue.
Cost of License Revenues
Our cost of license revenues principally consists of the cost of fulfillment of our software, royalty costs in connection with technology
licensed from third-party providers and amortization of intangible assets and capitalized software. The cost of fulfillment of our software
includes IT development efforts, personnel costs and related overhead associated with the physical and electronic delivery of our software
products.
Cost of license revenues decreased in 2014 compared to 2013 primarily due to a decrease of $34 in amortization of capitalized software
development costs, which was partially offset by an increase of $17 in amortization of intangible assets.
45
December 31, 2014
December 31, 2013
Unearned license revenues
$
488
$
465
Unearned software maintenance revenues
3,905
3,304
Unearned professional services revenues
440
323
Total unearned revenues
$
4,833
$
4,092
For the Year Ended December 31,
2014 vs. 2013
2013 vs. 2012
2014
2013
2012
$ Change
% Change
$ Change
% Change
Cost of license revenues
$
190
$
208
$
235
$
(18
)
(9
)%
$
(27
)
(11
)%
Stock-based compensation
2
2
2
—
—
—
—
Total expenses
$
192
$
210
$
237
$
(18
)
(9
)
$
(27
)
(11
)
% of License revenues
7
%
9
%
11
%