10-QPeriod: Q1 FY2019

Autodesk, Inc. Quarterly Report for Q1 Ended Apr 30, 2018

Filed June 8, 2018For Securities:ADSK

Summary

Autodesk, Inc.'s (ADSK) first-quarter fiscal 2019 results, filed on June 8, 2018, showed a notable increase in total net revenue to $559.9 million, up 15% year-over-year. This growth was primarily driven by a significant 102% surge in subscription revenue, which more than offset a 31% decline in maintenance revenue, indicating progress in the company's strategic shift towards a subscription-based business model. Annualized Recurring Revenue (ARR) also saw a healthy increase of 22% to $2.13 billion, reflecting the growing momentum of recurring revenue streams. Despite revenue growth, the company reported a net loss of $82.4 million ($0.38 per diluted share), an improvement from the prior year's loss of $129.6 million ($0.59 per diluted share). This loss is partly attributable to ongoing investments and restructuring costs. The adoption of new revenue recognition standards (ASC 606 and 340-40) had a material impact, adjusting reported figures and resulting in a cumulative decrease to accumulated deficit. The balance sheet reflects a solid liquidity position with $1.5 billion in cash and marketable securities. However, operating cash flow turned negative, decreasing to $(16.9) million from $45.2 million in the prior year, likely influenced by changes in working capital. The company continued its share repurchase program, demonstrating a commitment to returning value to shareholders. Management's discussion highlights the strategic transition, the importance of recurring revenue metrics, and the continued reliance on international markets, which represented 65% of net revenue.

Financial Statements
Beta

Key Highlights

  • 1Total net revenue increased by 15% to $559.9 million compared to the prior year's quarter.
  • 2Subscription revenue more than doubled, increasing by 102% to $350.4 million, while maintenance revenue decreased by 31% to $181.2 million, reflecting a successful transition to a subscription model.
  • 3Annualized Recurring Revenue (ARR) grew by 22% year-over-year to $2.13 billion, indicating strong recurring revenue momentum.
  • 4The company reported a net loss of $82.4 million, a slight improvement from the $129.6 million loss in the same period last year.
  • 5The adoption of ASC Topic 606 and 340-40 for revenue recognition impacted reported figures, including a reduction in accumulated deficit and adjustments to revenue and expense lines.
  • 6Cash and cash equivalents and marketable securities stood at a healthy $1.5 billion, providing strong liquidity.
  • 7Restructuring charges of $22.5 million were recognized, primarily related to employee termination costs and facility exit costs as part of a plan to re-align resources with strategic priorities.

Frequently Asked Questions

The primary driver of Autodesk's revenue growth was the significant increase in subscription revenue, which surged by 102% year-over-year. This reflects the company's successful transition from a perpetual license model to a subscription-based model.

The adoption of ASC Topic 606 and 340-40 for revenue recognition resulted in a cumulative decrease of $178.0 million to the opening balance of accumulated deficit. It also led to adjustments in reported revenue, cost of revenue, operating expenses, and balance sheet items like accounts receivable and deferred revenue, as shown in the 'As Adjusted' columns in the filing.

Autodesk maintained a strong liquidity position with $1.5 billion in cash and marketable securities as of April 30, 2018. However, operating cash flow turned negative, amounting to $(16.9) million for the quarter, a decrease from $45.2 million in the prior year. This was influenced by changes in working capital. The company continues to utilize share repurchases and has a $400 million credit facility available.

The company recognized $22.5 million in restructuring charges, primarily related to employee termination benefits and facility exit costs. This is part of a broader plan to realign investments with strategic priorities, indicating ongoing efforts to optimize operations and focus on key growth areas.