## Table

|  | Fiscal year ended January 31, 2019 | Change compared to prior fiscal year |  | Fiscal year ended January 31, 2018 | Management comments |
|---|---|---|---|---|---|
| (in millions) |  | $ | % |  |  |
| Cost of revenue: |  |  |  |  |  |
| Subscription and maintenance | $216.0 | $1.6 | 1% | $214.4 | Up primarily due to an increase in cloud hosting costs partially offset by a decrease in royalty and depreciation expense. |
| Other (1) | 54.4 | (18.2) | (25)% | 72.6 | Down primarily due to lower employee-related costs from reduced headcount associated with the Fiscal 2018 Plan restructuring and lower professional fees. |
| Amortization of developed technology | 15.5 | (0.9) | (5)% | 16.4 | Down as previously acquired developed technologies continue to become fully amortized. |
| Total cost of revenue | $285.9 | $(17.5) | (6)% | $303.4 |  |
| Marketing and sales | $1,183.9 | $96.6 | 9% | $1,087.3 | Up due to increased employee-related costs driven by higher headcount, as well as higher cloud hosting costs and professional fees. |
| Research and development | 725.0 | (30.5) | (4)% | 755.5 | Down due to a decrease in employee-related costs from lower headcount associated with the Fiscal 2018 plan restructuring partially offset by higher professional fees. |
| General and administrative | 340.1 | 34.9 | 11% | 305.2 | Up primarily due to higher professional fees, employee-related costs and facilities costs, partially offset by lower employee benefits costs. |
| Amortization of purchased intangibles | 18.0 | (2.2) | (11)% | 20.2 | Down as previously acquired intangible assets continue to become fully amortized. |
| Restructuring and other exit costs, net | 41.9 | (52.2) | (55)% | 94.1 | Down as we substantially completed the reduction in force and facilities consolidation of the Fiscal 2018 Plan. |
|  | $ 2,308.9 | $46.6 | 2% | $2,262.3 |  |



## Text

Cost of Revenue and Operating Expenses


Cost of subscription and maintenance revenue includes the labor costs of providing product support to our subscription and maintenance customers, including allocated IT and facilities costs, professional services fees related to operating our network and cloud infrastructure, royalties, depreciation expense and operating lease payments associated with computer equipment, data center costs, salaries, related expenses of network operations, and stock-based compensation expense.


Cost of other revenue includes labor costs associated with product setup, costs of consulting and training services contracts, and collaborative project management services contracts. Cost of other revenue also includes stock-based compensation expense, direct material and overhead charges, allocated IT and facilities costs, professional services fees and royalties. Direct material and overhead charges include the cost associated with electronic and physical fulfillment.


Cost of revenue, at least over the near term, is affected by the volume and mix of product sales, fluctuations in consulting costs, amortization of developed technology, new customer support offerings, royalty rates for licensed technology embedded in our products and employee stock-based compensation expense


Marketing and sales expenses include salaries, bonuses, benefits and stock-based compensation expense for our marketing and sales employees, the expense of travel, entertainment and training for such personnel, sales and dealer commissions, and the costs of programs aimed at increasing revenue, such as advertising, trade shows and expositions, and various sales and promotional programs. Marketing and sales expenses also include payment processing fees, the cost of supplies and equipment, gains and losses on our operating expense cash flow hedges, allocated IT and facilities costs, and labor costs associated with sales and order management.


Research and development expenses, which are expensed as incurred, consist primarily of salaries, bonuses, benefits and stock-based compensation expense for research and development employees, the expense of travel, entertainment and training for such personnel, professional services such as fees paid to software development firms and independent contractors, gains and losses on our operating expense cash flow hedges, and allocated IT and facilities costs.


General and administrative expenses include salaries, bonuses, acquisition-related transition costs, benefits and stock-based compensation expense for our CEO, finance, human resources and legal employees, as well as professional fees for legal and accounting services, certain foreign business taxes, gains and losses on our operating expense cash flow hedges, expense of travel, entertainment and training, net IT and facilities costs, and the cost of supplies and equipment.