Adobe 2013 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2013 Adobe annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 115

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115

46
Cost of subscription revenue increased due to the following:
% Change
2013-2012 % Change
2012-2011
Hosted server costs 23% 7%
Amortization of purchased intangibles 4 6
Total change 27% 13%
Cost of subscription revenue increased during fiscal 2013 as compared to fiscal 2012 primarily due to increased hosted
server costs and amortization of purchased intangibles. Hosted server costs increased primarily due to increases in data center
costs related to higher transaction volumes in our Adobe Marketing Cloud and Creative Cloud services, depreciation expense from
higher capital expenditures in prior years and compensation and related benefits driven by additional headcount, including from
our acquisition of Neolane in fiscal 2013. Amortization of purchased intangibles increased primarily due to increased amortization
of intangible assets purchased associated with our acquisitions of Behance and Neolane in fiscal 2013.
Cost of subscription revenue increased during fiscal 2012 as compared to fiscal 2011 primarily due to increased hosted
server costs and amortization of purchased intangibles. Hosted server costs increased primarily due to increases in compensation
and related benefits driven by additional headcount and hosting expenses associated with the launch of our Creative Cloud services
in the second quarter of fiscal 2012. Also contributing to the increase in hosted server costs is the increase in depreciation expense
from higher capital expenditures in prior years and data center costs related to higher transaction volumes in our Adobe Marketing
Cloud and Creative Cloud services. Amortization of purchased intangibles increased primarily due to increased amortization of
intangible assets associated with our acquisition of Efficient Frontier in the first quarter of fiscal 2012.
Services and Support
Cost of services and support revenue is primarily comprised of employee-related costs and associated costs incurred to
provide consulting services, training and product support.
Cost of services and support revenue increased during fiscal 2013 as compared to fiscal 2012 primarily due to increases in
third-party fees related to training and consulting services provided to our customers and compensation and related benefits driven
by additional headcount, including headcount from our acquisition of Neolane in fiscal 2013.
Cost of services and support revenue increased during fiscal 2012 as compared to fiscal 2011 primarily due to increases in
costs associated with compensation and related benefits driven by additional headcount, including headcount from our acquisition
of Efficient Frontier.
Operating Expenses (dollars in millions)
Fiscal
2013 Fiscal
2012 Fiscal
2011 % Change
2013-2012 % Change
2012-2011
Research and development $ 826.6 $ 742.8 $ 738.1 11% 1%
Percentage of total revenue 20% 17% 18%
Sales and marketing 1,620.5 1,516.1 1,385.8 7% 9%
Percentage of total revenue 40% 34% 33%
General and administrative 520.1 435.0 414.6 20% 5%
Percentage of total revenue 13% 10% 10%
Restructuring and other related charges (credits) 26.5 (2.9) 97.8 * *
Percentage of total revenue 1% —% 2%
Amortization of purchased intangibles 52.3 48.7 42.8 7% 14%
Percentage of total revenue 1% 1% 1%
Total operating expenses $ 3,046.0 $ 2,739.7 $ 2,679.1 11% 2%
_________________________________________
(*) Percentage is greater than 100%.
Table of Contents