10-QPeriod: Q2 FY2010

Autodesk, Inc. Quarterly Report for Q2 Ended Jul 31, 2009

Filed August 28, 2009For Securities:ADSK

Summary

Autodesk, Inc. reported its second-quarter fiscal year 2010 results on August 27, 2009, reflecting a challenging economic environment. For the three months ended July 31, 2009, net revenue significantly declined by 33% year-over-year to $414.9 million, impacted by a 48% drop in license and other revenue, although maintenance revenue saw a slight 3% increase. The company incurred an operating loss of $2.7 million, a stark contrast to the $118.8 million profit in the prior year, driven by substantial restructuring charges and reduced revenue. For the six-month period, net revenue fell 31% to $840.7 million, with a net loss of $21.7 million compared to a net income of $184.4 million in the prior year. The company took significant restructuring charges and a goodwill impairment charge, impacting profitability. Despite the downturn, Autodesk maintained a strong liquidity position with $1.03 billion in cash and marketable securities at the end of the period. The company is actively managing costs, including workforce reductions and facility consolidations, to navigate the economic challenges. Investors should note the significant revenue declines across all segments and geographies, with a particular emphasis on the impact of the global recession on software license sales.

Financial Highlights

47 data points
Beta

Revenue

$414.90M

87.9% Gross Margin

Net Income

$10.50M

2.5% Net Margin

EPS (Diluted)

$0.05

Total Assets

$2.31B

Cash & Equivalents

$668.50M

Free Cash Flow

$36.60M

Financial Statements
Beta
Revenue$414.90M
Cost of Revenue$50.10M
Gross Profit$364.80M
R&D Expenses$109.80M
Operating Expenses$362.10M
Operating Income$2.70M
Net Income$10.50M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)228.90M
Shares Outstanding (Diluted)232.30M

Key Highlights

  • 1Net revenue for the quarter ended July 31, 2009, decreased by 33% to $414.9 million compared to the prior year.
  • 2License and other revenue declined by 48% year-over-year, while maintenance revenue increased by 3%.
  • 3The company reported an operating loss of $2.7 million for the quarter, a substantial decrease from an operating income of $118.8 million in the prior year.
  • 4A net loss of $21.7 million was recorded for the six months ended July 31, 2009, compared to a net income of $184.4 million in the same period last year.
  • 5Significant restructuring charges of $26.4 million for the quarter and $42.9 million for the six months were recorded.
  • 6A goodwill impairment charge of $21.0 million was recognized for the Media and Entertainment segment.
  • 7Cash and cash equivalents, and marketable securities remained strong at $1.03 billion as of July 31, 2009.

Frequently Asked Questions

The primary reason for the significant decline in revenue and profitability is the ongoing global economic downturn, which has reduced customer demand for software licenses and led to deferred purchases. This macroeconomic pressure, coupled with substantial restructuring charges and a goodwill impairment charge, has severely impacted the company's financial performance.

Maintenance revenue saw a modest increase of 3% for the quarter, driven by higher net revenue per maintenance seat, though partially offset by decreases in program enrollment. However, the company noted that maintenance billings have declined year-over-year, indicating future downward pressure on maintenance revenue recognition over the next four quarters.

Autodesk is implementing cost reduction measures, including a restructuring program involving approximately 430 headcount reductions globally and the consolidation of up to 32 leased facilities. The company is also focusing on aligning its cost structure with its financial condition through discretionary spending reductions and contingent labor expense controls, while continuing to invest selectively in growth opportunities.

The goodwill impairment charge of $21.0 million relates to the Media and Entertainment segment and resulted from revisions to revenue and cash flow projections due to significant and sustained revenue declines. It indicates that the fair value of the assets within that segment fell below their carrying value, reflecting a reduced outlook for that specific business area.