10-QPeriod: Q2 FY2013

Autodesk, Inc. Quarterly Report for Q2 Ended Jul 31, 2012

Filed September 5, 2012For Securities:ADSK

Summary

Autodesk, Inc.'s (ADSK) 10-Q filing for the period ending July 31, 2012, reveals a mixed financial performance compared to the prior year. Total net revenue increased by 4% to $568.7 million for the third quarter and 8% to $1,157.3 million for the first six months. This growth was driven by increases in both license and maintenance revenue. However, income from operations saw a slight decrease of 2% in the third quarter, impacted by a slower revenue growth rate relative to operating expenses, while the six-month income from operations increased by 8%. The company is navigating a complex business environment marked by global economic uncertainties and internal organizational changes, which have led to execution challenges and lower-than-anticipated revenue in the second quarter. Key financial highlights include continued revenue growth across most segments and geographies, with notable strength in Asia Pacific. The company also reported a significant increase in cash, cash equivalents, and marketable securities, indicating solid liquidity. However, Autodesk is undertaking a worldwide restructuring plan, anticipating pre-tax charges of $50.0 million to $60.0 million, signaling a focus on efficiency and adaptation to cloud and mobile computing trends. The acquisition of Vela Systems for $76.0 million and Socialcam, Inc. for approximately $59.5 million also occurred during this period, reflecting ongoing investment in strategic growth areas.

Financial Highlights

48 data points
Beta

Revenue

$568.70M

89.5% Gross Margin

Net Income

$64.60M

11.4% Net Margin

EPS (Diluted)

$0.28

Total Assets

$3.38B

Cash & Equivalents

$930.20M

Free Cash Flow

$90.40M

Financial Statements
Beta
Revenue$568.70M
Cost of Revenue$59.80M
Gross Profit$508.90M
R&D Expenses$144.90M
Operating Expenses$416.00M
Operating Income$92.90M
Net Income$64.60M
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)227.80M
Shares Outstanding (Diluted)232.10M

Key Highlights

  • 1Total net revenue increased by 4% year-over-year to $568.7 million for the three months ended July 31, 2012, and by 8% to $1,157.3 million for the six months ended July 31, 2012.
  • 2Income from operations decreased by 2% to $92.9 million for the three months ended July 31, 2012, compared to the prior year period, reflecting operating expenses growing at a faster rate than revenue.
  • 3The company's cash, cash equivalents, and marketable securities stood at $1,716.8 million as of July 31, 2012, demonstrating a strong liquidity position.
  • 4Autodesk announced a global restructuring plan expected to incur $50.0 million to $60.0 million in pre-tax charges, aimed at adapting to cloud and mobile computing trends and improving operational efficiency.
  • 5Acquisitions of Vela Systems for $76.0 million (closed June 2012) and Socialcam, Inc. for approximately $59.5 million (closed August 2012) indicate strategic investments in growth areas.
  • 6Revenue from the Asia Pacific region showed significant growth, increasing by 12% for the three months and 15% for the six months ended July 31, 2012.
  • 7The company repurchased 3.4 million shares for $111.1 million during the third quarter of fiscal 2013, continuing its share repurchase program.

Frequently Asked Questions

Autodesk reported revenue growth for the quarter and six months ended July 31, 2012. However, the company noted a decline in demand across geographic regions due to execution challenges from internal organizational changes and an uneven global economy, resulting in lower-than-anticipated revenue for the quarter. The company is focused on working through these challenges and has outlined a strategy to grow its PC-based software business while migrating products to the cloud and expanding into new markets. The outlook also includes expected restructuring charges impacting operating margins.

For the three months ended July 31, 2012, income from operations decreased slightly due to operating expenses growing at a faster rate than net revenue. The company is actively managing its cost structure, and has announced a significant restructuring plan. Autodesk emphasizes maintaining its operating margin percentage by delivering market-leading products and investing in new offerings while controlling expenses. However, the announced restructuring plan will result in material charges and is expected to reduce operating margins in the near term.

The acquisition of Vela Systems, a provider of a cloud-based mobile platform for construction, and Socialcam, a video-sharing smartphone application and web service, indicates Autodesk's strategic focus on expanding its cloud, mobile, and social computing capabilities. These acquisitions are intended to enhance Autodesk's product offerings and reach into new markets, aligning with its strategy to lead industry transitions in these areas.

Autodesk is actively pursuing a strategy to lead the transition into cloud computing in the industries it serves. This involves migrating many of its products to the cloud, developing new cloud computing infrastructure, and redesigning applications to leverage cloud capabilities. The company is also developing new capabilities enabled by the cloud, such as collaborative PLM and online simulation, and expanding into new markets through cloud, mobile, and social computing. The recent restructuring plan is also aimed at accelerating this transition.