10-QPeriod: Q3 FY2009

Autodesk, Inc. Quarterly Report for Q3 Ended Oct 31, 2008

Filed December 4, 2008For Securities:ADSK

Summary

Autodesk's Form 10-Q for the period ending October 30, 2008, reveals a company navigating a challenging economic environment with resilient revenue growth and strong profitability. The company reported total net revenue of $607.1 million for the third quarter, a 13% increase year-over-year, driven by robust growth in maintenance revenue (+31%) and a solid 6% increase in license and other revenue. Net income for the quarter was $104.5 million, translating to diluted EPS of $0.45. This performance demonstrates the company's ability to maintain pricing power and benefit from its recurring revenue streams despite a noticeable slowdown in overall seat growth, particularly in the Americas. The acquisition of Moldflow in June 2008 contributed to an increase in goodwill and the manufacturing solutions segment, indicating a strategy of inorganic growth to enhance its product portfolio. Despite the positive top-line and bottom-line results, management noted the impact of the global economic downturn, which led to a deceleration in revenue growth and a decrease in backlog compared to previous periods. The company also highlighted a strengthening U.S. dollar, which negatively impacted international revenue when translated. Autodesk's balance sheet remains strong, with $796.4 million in cash and cash equivalents. However, the company has started to draw on its credit lines and noted specific challenges related to its investment portfolio, including a $2.0 million impairment charge on its holdings in the Reserve Funds due to Lehman Brothers' bankruptcy and illiquid auction rate securities. The company is actively managing its costs and remains focused on long-term growth through product innovation and strategic acquisitions, while acknowledging the potential for future restructuring charges in response to the economic climate.

Financial Highlights

29 data points
Beta

Revenue

$607.10M

91.3% Gross Margin

Net Income

$104.50M

17.2% Net Margin

EPS (Diluted)

$0.45

Cash & Equivalents

$796.40M

Free Cash Flow

$88.00M

Financial Statements
Beta
Revenue$607.10M
Cost of Revenue$52.90M
Gross Profit$554.20M
R&D Expenses$137.00M
Operating Expenses$414.60M
Operating Income$139.60M
Net Income$104.50M
EPS (Basic)$0.46
EPS (Diluted)$0.45
Shares Outstanding (Basic)225.30M
Shares Outstanding (Diluted)230.40M

Key Highlights

  • 1Total net revenue for the third quarter increased by 13% year-over-year to $607.1 million.
  • 2Net income for the quarter was $104.5 million, with diluted EPS of $0.45.
  • 3Maintenance revenue showed strong growth of 31% year-over-year, contributing significantly to overall revenue.
  • 4Acquisition of Moldflow Corporation in June 2008 added $128.6 million in goodwill and expanded the Manufacturing Solutions segment.
  • 5The company experienced a slowdown in seat growth, with a 1% decrease in revenue from the Americas region.
  • 6Autodesk reported $796.4 million in cash and cash equivalents, though it began utilizing its credit lines.
  • 7A $2.0 million other-than-temporary impairment charge was recorded related to investments in the Reserve Funds following Lehman Brothers' bankruptcy.

Frequently Asked Questions

Autodesk reported a 13% increase in total net revenue for the third quarter ended October 31, 2008, reaching $607.1 million, up from $538.4 million in the same period last year. This growth was driven by a significant 31% increase in maintenance revenue and a 6% increase in license and other revenue.

As of October 31, 2008, Autodesk held $796.4 million in cash and cash equivalents. While the company has a strong cash position, it reported $3.9 million in outstanding borrowings on its China line of credit and noted it had drawn on its U.S. line of credit during the period. Management indicated that the global financial crisis has impacted liquidity and put capital resources at risk, leading to the diversification of cash balances to other global financial institutions.

Autodesk acquired Moldflow Corporation in June 2008 for approximately $184.9 million. This acquisition contributed $128.6 million to goodwill and added to the Manufacturing Solutions segment. The related in-process research and development of $16.2 million was expensed during the second quarter of fiscal 2009. The acquisition was not deemed material enough to require pro forma results of operations to be presented.

Autodesk highlighted several key risks, including the deteriorating global economic conditions affecting customer demand and sales cycles, the recent global credit and banking crisis potentially impacting distribution channels and treasury functions, and fluctuations in currency exchange rates which have negatively impacted revenue due to a strengthening U.S. dollar. Additionally, risks related to its distribution channel's financial stability, the volatility of its investment portfolio, and challenges in developing and gaining customer acceptance for new product offerings were noted.