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Autodesk Reports Third Quarter Financial Results

On the heels of the company’s move to a subscription-only model for its software suites, Autodesk reports sluggish results for the third quarter of 2015.

On the heels of the company’s move to a subscription-only model for its software suites, software developer Autodesk reported sluggish results for the third quarter of 2015.

Revenue was up two percent only when measured in constant currencies; otherwise it was down three percent year-over-year. Subscriptions increased by 80,000 sequentially but deferred revenue fell. Billings fell four percent, and Autodesk reported an operating loss. As it that wasn’t enough, a one percent drop in marketing expenses coincided with a three percent drop in revenue.

Autodesk revenue in the third fiscal quarter of 2016 (ended October 31, 2015) was $599.8 million, down three from 3Q15 and up two percent on a constant currency basis. Net loss for the quarter was $43.8 million, down from a net profit of $10.7 million a year ago.

The full press release is shown below:

SAN RAFAEL, Calif.--(BUSINESS WIRE)--Nov. 19, 2015-- Autodesk, Inc. (NASDAQ: ADSK) today reported financial results for the third quarter of fiscal 2016.

Third Quarter Fiscal 2016

  • Total subscriptions increased by approximately 80,000 from the second quarter of fiscal 2016 to 2.47 million at the end of the third quarter.
  • Total annualized recurring revenue (ARR) was $1.35 billion, an increase of 15 percent compared to the third quarter last year as reported, and 18 percent on a constant currency basis.
  • Deferred revenue increased 20 percent to $1.21 billion, compared to $1.01 billion in the third quarter last year.
  • Total billings decreased 9 percent, compared to the third quarter last year as reported, and 4 percent on a constant currency basis.
  • Revenue was $600 million, a decrease of 3 percent compared to the third quarter last year as reported, and an increase of 2 percent on a constant currency basis.
  • Total GAAP spend (cost of revenue plus operating expenses) was $615 million, an increase of 2 percent compared to the third quarter last year.
  • Total non-GAAP spend was $545 million, an increase of 1 percent compared to the third quarter last year.
  • GAAP operating margin was (2) percent, compared to 2 percent in the third quarter last year.
  • Non-GAAP operating margin was 9 percent, compared to 13 percent in the third quarter last year. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
  • GAAP diluted net loss per share was $(0.19). GAAP diluted net income per share was $0.05 in the third quarter last year.
  • Non-GAAP diluted net income per share was $0.14, compared to $0.25 in the third quarter last year.
  • Cash flow from operating activities was $80 million, compared to $136 million in the third quarter last year.

"Autodesk continues to focus on delivering world-class software and great experiences to our customers, while driving our business model transition as rapidly as possible,” said Carl Bass, Autodeskpresident and CEO. "We are balancing the necessary investments in the transition with our ongoing focus on spend management, leading to better than expected profitability for the quarter. And we remain confident in our long-term view that our business model transition will deliver a 20 percent CAGR in subscriptions and a 24 percent CAGR in ARR through fiscal year 2020."

Third Quarter Operational Overview

Total subscriptions were 2.47 million, an increase of approximately 80,000 from the second quarter of fiscal 2016. Maintenance subscriptions were 2.10 million, an increase of 33,000. New model subscriptions (Desktop, enterprise flexible license, and cloud subscription) were 366,000, an increase of 47,000. The increase in new model subscriptions was led by Desktop subscriptions.

Total annualized recurring revenue (ARR) for the third quarter increased 15 percent to $1.35 billion compared to the third quarter last year as reported and 18 percent at constant currency. Maintenance ARR was $1.13 billion and increased 6 percent compared to the third quarter last year. New model ARR was $221 million and increased 100 percent compared to the third quarter last year.

Revenue in the Americas was $236 million, an increase of 2 percent compared to the third quarter last year. EMEA revenue was $225 million, a decrease of 5 percent compared to the third quarter last year as reported and an increase of 2 percent on a constant currency basis. Revenue in APAC was $139 million, a decrease of 7 percent compared to the third quarter last year as reported and 1 percent on a constant currency basis. Revenue from emerging economies was $88 million, a decrease of 8 percent compared to the third quarter last year as reported and 6 percent on a constant currency basis. Revenue from emerging economies represented 15 percent of total revenue in the third quarter.

Revenue from the Architecture, Engineering and Construction business segment was $225 million, an increase of 4 percent compared to the third quarter last year. Revenue from the Manufacturing business segment was $175 million, an increase of 3 percent compared to the third quarter last year. Revenue from the Platform Solutions and Emerging Business segment was $161 million, a decrease of 15 percent compared to the third quarter last year. Revenue from the Media and Entertainment business segment was $39 million, a decrease of 9 percent compared to the third quarter last year.

Revenue from Flagship products was $267 million, a decrease of 7 percent compared to the third quarter last year. Revenue from Suites was $218 million, a decrease of 3 percent compared to the third quarter last year. Revenue from New and Adjacent products was $114 million, an increase of 9 percent compared to the third quarter last year.

Business Outlook

The following are forward-looking statements based on current expectations and assumptions, and involve risks and uncertainties some of which are set forth below under "Safe Harbor." Autodesk's business outlook for the fourth quarter and full year fiscal 2016 assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment. A reconciliation between the GAAP and non-GAAP estimates for fiscal 2016 is provided below or in the tables following this press release.

Fourth Quarter Fiscal 2016

Q4 FY16 Guidance Metrics

     

Q4 FY16 (ending
January 31, 2016)

Revenue (in millions)

     

$620 - $640

EPS GAAP

     

($0.31) - ($0.27)

EPS Non-GAAP (1)

     

$0.08 - $0.12

_______________

(1) Non-GAAP earnings per diluted share exclude $0.25 related to stock-based compensation expense and $0.10 for the amortization of acquisition related intangibles, net of tax, and $0.04 related to non-cash GAAP tax charges.

Full Year Fiscal 2016

FY16 Guidance Metrics

FY16 (ending
January 31, 2016)

Billings growth (1)

     

0.5% - 1.5%

Revenue (in millions) (2)

     

$2,475 - $2,495

GAAP operating margin

     

Approximately (1)%

Non-GAAP operating margin (3)

     

Approximately 10%

EPS GAAP (4)

     

($1.59) - ($1.55)

EPS Non-GAAP (5)

     

$0.72 to $0.76

Net subscription additions

     

310,000 - 330,000

_______________

(1) On a constant currency basis, billings growth would be 7% - 8%.

(2) On a constant currency basis, revenue growth would be 3% - 4%.

(3) Non-GAAP operating margin excludes 8% related to stock-based compensation expense and 3% for the amortization of acquisition related intangibles.

(4) GAAP net loss per diluted share includes $1.08 related to the non-cash GAAP tax charge primarily as a result of the $231 million valuation allowance established in Q2. The charge reflects the business model transition and resulting reduction in our pre-tax U.S. GAAP profitability.

(5) Non-GAAP earnings per diluted share excludes $1.08 related to the non-cash GAAP tax charge primarily as a result of the valuation allowance established in Q2 of this year, $0.87 related to stock-based compensation expense, and $0.37 for the amortization of acquisition related intangibles, offset by $0.01 for gains on strategic investment.

The fourth quarter and full year fiscal 2016 outlook assume a projected annual effective tax rate of (170) percent and 27 percent for GAAP and non-GAAP results, respectively.

Source: Autodesk, Inc.

Jennifer Wolfe's picture

Formerly Editor-in-Chief of Animation World Network, Jennifer Wolfe has worked in the Media & Entertainment industry as a writer and PR professional since 2003.