Autodesk 2006 Annual Report Download - page 80

Revenue from the sales of our services, training and support are immaterial for all periods presented.
Maintenance revenues consist of revenues derived from the subscription program. As a percentage of total
net revenues, maintenance revenues were 18% and 14% for fiscal 2006 and fiscal 2005, respectively. Our
subscription program, available to most customers worldwide, continues to attract new and renewal customers
by providing them with a cost effective and predictable budgetary option to obtain the productivity benefits of
our planned annual product release cycle and enhancements. We expect maintenance revenues to continue to
increase both in absolute dollars and as a percentage of total net revenues.
Net revenues in the Americas region increased during fiscal 2006, as compared to fiscal 2005, largely due
to strong subscription and new seat revenues, offset in part by lower upgrade revenues.
Net revenues in the Europe, Middle East and Africa (“EMEA”) region increased during fiscal 2006, as
compared to fiscal 2005, primarily due to strong subscription, new seat and upgrade revenues and growth in
the EMEA emerging markets of Russia, Poland, Czech Republic and the Middle East.
Net revenues in the Asia/Pacific (“APAC”) region increased during fiscal 2006, as compared to fiscal 2005,
primarily from strong new seat revenues, and to a lesser extent from subscription and upgrade revenues as our
subscription program was introduced in the APAC region after successful introductions first in the Americas and
then in EMEA. We experienced strong growth during fiscal 2006 in Japan, China, Australia and South Korea.
The increase in net revenues for the Design Solutions Segment during fiscal 2006, as compared to fiscal
2005, was primarily due to strong new seat and subscription revenues as well as a more modest increase in
upgrade revenues. Maintenance revenue from our subscription program increased to 20% of Design Solutions
Segment revenue in fiscal 2006, as compared to 16% in fiscal 2005. Although we have been placing increased
focus on vertically-oriented and 3D product lines, sales of AutoCAD, AutoCAD upgrades and AutoCAD LT
continue to comprise a significant portion of our net revenues. Such sales, which are reflected in the net revenues
for the Platform Technology Division and Other, accounted for 44% of our consolidated net revenues in both
fiscal 2006 and fiscal 2005, growing 23% in absolute dollars between the periods. Net revenues for our 3D design
products (Autodesk Inventor products, Autodesk Revit products and Autodesk Civil 3D) increased 60% during
fiscal 2006 as compared to fiscal 2005. Total sales of 3D design products accounted for 19% of consolidated net
revenues in fiscal 2006 compared to 14% in fiscal 2005. A critical component of our growth strategy is to grow
our 2D base while migrating our customers, including customers of AutoCAD and related vertical industry
products, to our higher-priced 3D products. However, should sales of 2D products decrease without a
corresponding increase in sales of 3D products, our results of operations will be adversely affected.
Net revenues for the Media and Entertainment Segment (“M&E”) during fiscal 2006 increased 8% as
compared to fiscal 2005, primarily due to new seat and subscription revenues of our animation product 3ds Max
as well as growth in the sales of our Linux-based Advanced Systems Products. These increases were partially
offset by recent declines in Advanced Systems sales on the SGI platform. Net revenues from Advanced Systems
sales were $112.3 million during fiscal 2006 as compared to $110.4 million during fiscal 2005. The transition of our
Advanced Systems customers from the higher-priced, proprietary SGI platform to lower-priced, open PC-based
platforms may continue to adversely impact Advanced Systems revenue in fiscal 2007.
International sales accounted for 66% of our net revenues in fiscal 2006 as compared to 65% in the prior
fiscal year. We believe that international sales will continue to comprise a significant portion of net revenues.
Economic weakness in any of the countries that contribute a significant portion of our net revenues would have
a material adverse effect on our business. Had exchange rates from fiscal 2005 been in effect during fiscal 2006,
translated international revenues would have been $9.1 million higher for fiscal 2006. Recent strengthening of
the U.S. dollar, relative to foreign currencies, if it were to continue, could significantly and adversely impact our
future financial results for a given period. Net revenues in emerging economies of China, India and Eastern
Europe, grew by greater than 60% between fiscal 2005 and fiscal 2006. This growth was a significant factor in
our international sales growth during fiscal 2006.
Fiscal 2005 Net Revenues Compared to Fiscal 2004 Net Revenues
Net revenues during fiscal 2005, as compared to fiscal 2004, increased in all three of our geographic areas,
due primarily to strong subscription, new seat and upgrade revenues, coupled with the positive effects of changes
in foreign currencies.
34