10-QPeriod: Q1 FY2020

Autodesk, Inc. Quarterly Report for Q1 Ended Apr 30, 2019

Filed June 4, 2019For Securities:ADSK

Summary

Autodesk, Inc.'s first-quarter 2019 filing (period ending April 30, 2019) reveals a significant shift in its business model towards subscriptions, as evidenced by a substantial 70% year-over-year increase in subscription revenue. This growth in subscription revenue helped drive a 31% increase in total net revenue to $735.5 million. The company reported a net loss of $24.2 million, or ($0.11) per share, an improvement from a net loss of $82.4 million in the prior year period, signaling progress towards profitability. The company's strategic transition from perpetual licenses to subscriptions is clearly underway, with a substantial portion of maintenance revenue customers migrating to subscription plans. While maintenance revenue saw a 38% decline, this is a direct result of the company's incentivized maintenance-to-subscription (M2S) program, aligning with the long-term subscription strategy. Total Annualized Recurring Revenue (ARR) reached $2.83 billion, with subscription plan ARR growing by 8% year-over-year.

Financial Highlights

48 data points
Beta

Revenue

$735.50M

88.8% Gross Margin

Net Income

-$24.20M

-3.3% Net Margin

EPS (Diluted)

$-0.11

Total Assets

$4.81B

Cash & Equivalents

$883.20M

Free Cash Flow

$206.50M

Financial Statements
Beta
Revenue$735.50M
Cost of Revenue$82.70M
Gross Profit$652.80M
R&D Expenses$205.60M
Operating Expenses$628.00M
Operating Income$24.80M
Net Income-$24.20M
EPS (Basic)$-0.11
EPS (Diluted)$-0.11
Shares Outstanding (Basic)219.60M
Shares Outstanding (Diluted)219.60M

Key Highlights

  • 1Total net revenue increased 31% to $735.5 million compared to the prior year period.
  • 2Subscription revenue grew by 70% year-over-year, demonstrating the success of the company's strategic shift.
  • 3Net loss improved significantly to $24.2 million from $82.4 million in the prior year period.
  • 4Total ARR reached $2.83 billion, with a strong 8% increase in subscription plan ARR.
  • 5Maintenance revenue declined by 38% due to the ongoing maintenance-to-subscription (M2S) migration program.
  • 6The company's cash flow from operations turned positive, reaching $221.2 million compared to a use of cash of $16.9 million in the prior year period.
  • 7New lease accounting standards (ASC Topic 842) were adopted, impacting the balance sheet by adding $277.5 million in operating lease right-of-use assets and liabilities.

Frequently Asked Questions

The primary driver for revenue growth is the substantial increase in subscription revenue, which grew by 70% year-over-year. This reflects the successful execution of Autodesk's strategic shift from perpetual software licenses to a subscription-based business model.

Maintenance revenue decreased by 38% due to the company's strategic 'maintenance-to-subscription' (M2S) program. This program incentivizes customers on maintenance plans to transition to subscription offerings, which is a key part of Autodesk's long-term strategy.

Autodesk has a significant amount of debt outstanding, including notes and a term loan. The company reported $1.96 billion in long-term debt as of April 30, 2019. While they have credit facilities available, they had no outstanding borrowings under their revolving credit facility at the time of filing, but had $375 million outstanding under their term loan. The company's financial covenants are being met, and they expect to manage their liquidity needs through current cash, operating cash flows, and external borrowings.

Autodesk adopted ASC Topic 842, 'Leases,' as of February 1, 2019. This resulted in the recognition of operating lease right-of-use assets and lease liabilities on the balance sheet, adding $277.5 million in total assets and liabilities and impacting accounts like 'Prepaid expenses and other current assets,' 'Operating lease right-of-use assets,' 'Operating lease liabilities,' and 'Long-term operating lease liabilities.' The adoption had a immaterial impact on the statement of operations or cash flow from operating activities.