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Autodesk Discontinues Upgrade Sales

At an Investors Day meeting in San Francisco, Autodesk announces modest layoffs and explains changes in its business model, including the discontinuation of upgrade purchases.

As part of an Investors Day meeting at the Autodesk Gallery in San Francisco, technology developer Autodesk said it would discontinue the ability to purchase software upgrades on February 1, 2015, according to a report by Graphic Speak. The move is reportedly part of the company’s long-term strategy to move revenue from purchases to subscriptions and rentals.

In addition to a wide-ranging discussion of business, technology, and markets, Autodesk also said it will lay off approximately 100 employees, and close several facilities. Autodesk CEO Carl Bass reportedly said the layoffs are about re-balancing staffing, such as lowering the number of employees in under-performing markets like Southern Europe. The layoffs represent about 1.5 percent of the company’s workforce. The facility closures are to eliminate redundancies in locations where acquisitions have led to more than one Autodesk facility in a city or area. Autodesk will record pre-tax restructuring charges of between $15 million and $20 million in the next two quarters; about 80 percent of that total will be for employee termination benefits.

Bass and several members of the Autodesk senior executive team spent four hours with investment analysts, describing the company’s plans for the next few years. The new business model is a mix of selling perpetual licenses for single products and suites, with some new subscription services and a small amount of software rental, introduced this fiscal year. The plan is to shift customers away from single product purchases toward suites, and to move from buying perpetual licenses to acquiring software on long-term subscription or short-term rental.

Autodesk now offers six distinctive technologies as cloud-based products, and plans to add many more in the coming quarters. Bass said the company intends to be an industry leader in leveraging the three macro trends driving the software industry today—social, mobile, and cloud.

Despite single-digit revenue growth in recent quarters, Bass and his team pitched an optimistic analysis of what the company will do in the next four years. By fiscal year 2018 (which ends January 31, 2018) Autodesk intends to reach:

  • 12 percentcompound annual growth rate (CAGR) in billings
  • 20 percentincrease in value received from existing subscribers, by offering newproducts and services
  • 50 percentmore subscribers, including new initiatives in education and consumermarkets
  • 70 percentof total revenue as recurring.

Autodesk estimates its total addressable market is currently $21 billion.