Symantec 2008 Annual Report Download - page 118

RESULTS OF OPERATIONS
Total Net Revenues
2008 2007 2006
Fiscal
($ in thousands)
Net revenues .................................. $5,874,419 $5,199,366 $4,143,392
Period over period change ........................ 675,053 1,055,974
13% 25%
Net revenues increased in fiscal 2008 as compared to fiscal 2007 primarily due to higher amortization of
deferred revenue as a result of the higher amount of deferred revenue at the beginning of the fiscal 2008 period than
at the beginning of the fiscal 2007 period and increased sales related to our Backup Exec, Storage Foundation, and
Net Backup products. Our total deferred revenue grew from $2.754 billion to $3.077 billion in fiscal 2008 and grew
from $2.163 billion to $2.754 billion in fiscal 2007. The higher deferred revenue balance at the beginning of fiscal
2008 is due to a greater portion of the revenue from transactions being subject to deferral since the beginning of the
third quarter of fiscal 2007 than was the case in prior periods as discussed below. In addition, we realized
$194 million due to the new sales of products from our April 6, 2007 acquisition of Altiris for which there is no
comparable revenue in the same prior year period and a favorable foreign currency impact in fiscal 2008 as
compared to fiscal 2007.
As noted above, we realized an increase in recognized revenue from deferred revenue in fiscal 2008. This
increase in deferred revenue resulted from combining our buying programs for all of our enterprise offerings,
negotiating more transactions that commit customers to multi-year periods, offering more flexibility in contractual
terms and in product deployments, and providing more services in combination with license and maintenance sales.
In the December 2006 quarter, we combined our buying programs for all of our enterprise offerings to provide our
customers and partners a single vendor relationship and simplify the way we do business. Previously, our storage
and availability products and services were sold under Veritas’ pre-merger buying programs, while our security
products and services were sold under our historical buying programs. The combination of buying programs
resulted in a change in the VSOE for some of our storage and availability products and services. This change,
coupled with an increased number of maintenance renewals sold with a license component, resulted in a larger
portion of revenues associated with contracts being classified as Content, subscriptions, and maintenance revenue,
which is subject to deferral, instead of Licenses revenue, which is generally recognized immediately. These factors
resulted in lower recognized revenue growth rates in the first six months of fiscal 2008 and in fiscal 2007.
Some of our customers have also requested increased flexibility in product deployments in site license
arrangements. This may result in an increase in deferred revenue and classification of all revenues associated with
the specific contract as Content, subscriptions, and maintenance revenue, which is recognized over time, as VSOE
may not exist in certain types of flexible deployment contracts. As a result of our initiative to offer customers a more
comprehensive solution to protect and manage a global IT infrastructure, we have seen an increasing amount of
services sold in conjunction with license and maintenance contracts. Inclusion of such services often results in
increased deferred revenue and increased classification of revenues as Content, subscriptions, and maintenance
revenue, as VSOE may not exist for some of the services provided.
Net revenues increased in fiscal 2007 as compared to fiscal 2006 primarily due to the new sales of the storage
and availability products and services from our July 2005 acquisition of Veritas for the full twelve months in the
2007 period compared to nine months in the 2006 period. We were required under purchase accounting rules to
reduce the amount of Veritas’ deferred revenue that we recorded in connection with the acquisition of Veritas to an
amount equal to the fair value of our contractual obligation related to that deferred revenue. Unless otherwise
specified, “storage and availability products and services” include products and services obtained through our
acquisition of Veritas, and complementary products and services obtained or developed subsequent to such
acquisition. These products and services contributed $518 million of net revenues in the June 2006 quarter for
which there was no comparable revenue in the June 2005 quarter. The remainder of the revenue increase is due to
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