10-QPeriod: Q1 FY2018

Autodesk, Inc. Quarterly Report for Q1 Ended Apr 30, 2017

Filed May 31, 2017For Securities:ADSK

Summary

Autodesk, Inc. reported its first-quarter fiscal year 2018 results, ending April 30, 2017. The company experienced a year-over-year decrease in total net revenue from $511.9 million to $485.7 million. This decline was primarily driven by a significant 66% drop in license and other revenue, a consequence of the ongoing shift away from perpetual licenses. However, this was partially offset by a substantial 103% increase in subscription revenue, reflecting the company's strategic pivot towards a subscription-based business model. Despite the revenue dip, the company demonstrated progress in its business model transition. Recurring revenue increased by 18% to $435.9 million, comprising 90% of total net revenue. Annualized Recurring Revenue (ARR) also saw a healthy 6% increase to $1.74 billion, driven by subscription plan ARR growth. Autodesk reported a net loss of $129.6 million for the quarter, an improvement from the $167.7 million net loss in the prior year period, indicating progress in operational efficiency and the management of expenses.

Financial Highlights

50 data points
Beta

Revenue

$485.70M

83.9% Gross Margin

Net Income

-$129.60M

-26.7% Net Margin

EPS (Diluted)

$-0.59

Total Assets

$4.43B

Cash & Equivalents

$1.34B

Free Cash Flow

$36.60M

Financial Statements
Beta
Revenue$485.70M
Cost of Revenue$78.20M
Gross Profit$407.50M
R&D Expenses$187.70M
Operating Expenses$527.10M
Operating Income-$119.60M
Net Income-$129.60M
EPS (Basic)$-0.59
EPS (Diluted)$-0.59
Shares Outstanding (Basic)219.90M
Shares Outstanding (Diluted)219.90M

Key Highlights

  • 1Total net revenue decreased by 5% to $485.7 million, primarily due to the strategic discontinuation of perpetual license sales.
  • 2Subscription revenue surged by 103% to $173.4 million, underscoring the successful transition to a subscription-based business model.
  • 3Recurring revenue increased by 18% to $435.9 million, now representing 90% of total net revenue, indicating a more predictable revenue stream.
  • 4Annualized Recurring Revenue (ARR) grew by 6% to $1.74 billion, signaling continued business momentum.
  • 5The company reported a net loss of $129.6 million, which is an improvement from a net loss of $167.7 million in the prior year period.
  • 6Operating expenses decreased by 7% to $527.1 million, largely due to reduced restructuring charges.
  • 7Autodesk repurchased $195.9 million of its common stock during the quarter, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

The primary driver for the decrease in total net revenue is the company's strategic shift away from perpetual software licenses towards a subscription-based model. This has led to a significant reduction in 'license and other revenue'.

The transition is reflected in a substantial increase in 'subscription revenue' and 'recurring revenue,' which now forms the majority of the company's revenue. While overall net revenue may be impacted in the short term due to upfront vs. ratable revenue recognition, key metrics like ARR show positive growth.

While Autodesk reported a net loss, it was a smaller loss compared to the prior year, indicating improved operational efficiency. The significant increase in subscription revenue, growth in ARR, and robust cash flow from operations suggest that the company is managing its transition effectively and maintaining financial stability. The company also has substantial cash and marketable securities.

Autodesk changed its revenue presentation to separate 'maintenance' and 'subscription' revenue into distinct line items. This provides greater transparency into the performance of its evolving business model, reflecting the shift from legacy maintenance contracts to new subscription offerings.