Autodesk Reports Strong Third Quarter Results

SAN RAFAEL, Calif.–(BUSINESS WIRE)–Autodesk, Inc. (NASDAQ:ADSK) today reported financial results for the third quarter of fiscal 2015.

Third Quarter Fiscal 2015

Total billings increased 25 percent, compared to the third quarter last year.

Revenue was $618 million, an increase of 11 percent, compared to the third quarter last year as reported, and increased 12 percent on a constant currency basis. Revenue contribution from the recent acquisition of Delcam was approximately $14 million.

Total maintenance, desktop (rental), and cloud subscriptions increased by approximately 121,000 from the second quarter of fiscal 2015, including approximately 25,000 subscriptions related to Delcam. This is the first quarter that Delcam subscriptions have been included in the subscription count.

GAAP operating margin was 2 percent, compared to 12 percent in the third quarter last year.

Non-GAAP operating margin was 13 percent, compared to 22 percent in the third quarter last year. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.

GAAP diluted earnings per share were $0.05, compared to $0.25 in the third quarter last year.

Non-GAAP diluted earnings per share were $0.25, compared to $0.41 in the third quarter last year.

Deferred revenue was a record $1 billion, an increase of 31 percent, compared to the third quarter last year.

Cash flow from operating activities was $136 million, an increase of 50 percent, compared to the third quarter last year.

“Strong billings and revenue growth was driven by strength in several areas including suites, our Architecture, Engineering and Construction (AEC) and Manufacturing business segments, large deal activity, and double-digit growth in all three of our major geographies on a constant currency basis,” said Carl Bass, Autodesk president and CEO. “We continue to make meaningful progress in our transition to a more recurring, subscription-based business, adding approximately 121,000 subscriptions and more flexible enterprise license agreements. As a result, deferred revenue increased significantly to a record $1 billion. These strong results have led us to raise our outlook for billings and revenue for fiscal 2015 for the third time this year.”

Third Quarter Operational Overview

EMEA revenue was $238 million, an increase of 17 percent compared to the third quarter last year as reported, and 15 percent on a constant currency basis. Revenue in the Americas increased 11 percent compared to the third quarter last year to $231 million. Revenue in APAC was $149 million, an increase of 5 percent compared to the third quarter last year as reported, and 10 percent on a constant currency basis. Revenue from emerging economies was $95 million, an increase of 13 percent compared to the third quarter last year both as reported and on a constant currency basis. Revenue from emerging economies represented 15 percent of total revenue in the third quarter.

Revenue from the AEC business segment was $217 million, an increase of 17 percent compared to the third quarter last year. Revenue from the Platform Solutions and Emerging Business (PSEB) segment was $188 million, an increase of 3 percent compared to the third quarter last year. Revenue from the Manufacturing business segment was $170 million, an increase of 20 percent compared to the third quarter last year. Revenue from the Media and Entertainment business (M&E) segment was $43 million, a decrease of 3 percent compared to the third quarter last year.

Revenue from Flagship products was $288 million, an increase of 5 percent compared to the third quarter last year. Revenue from Suites was $225 million, an increase of 13 percent compared to the third quarter last year. Revenue from New and Adjacent products was $105 million, an increase of 29 percent compared to the third quarter last year.

Business Outlook

The following are forward-looking statements based on current expectations and assumptions, and involve risks and uncertainties some of which are set forth below. Autodesk’s business outlook for the fourth quarter and full year fiscal 2015 assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment. A reconciliation between the GAAP and non-GAAP estimates for fiscal 2015 is provided below or in the tables following this press release.

Fourth Quarter Fiscal 2015

Q4 FY15 Guidance Metrics

Q4 FY15 (ending
January 31, 2015)

Revenue (in millions) $640 – $655 EPS GAAP ($0.03) – $0.00 EPS Non-GAAP (1)

$0.22 – $0.25

(1) Non-GAAP earnings per diluted share exclude $0.17 related to stock-based compensation expense and $0.08 for the amortization of acquisition related intangibles, net of tax.

Full Year Fiscal 2015

Autodesk is updating its guidance for full fiscal year 2015 as follows:

FY15 Guidance Metrics

FY15 (ending
January 31, 2015)

Billings growth 15 – 17% Revenue growth 9 – 10 %

Net subscription additions

325,000 – 375,000 GAAP operating margin 4.5% – 5% Non-GAAP operating margin 15 – 15.5% EPS GAAP $0.30 – $0.33 EPS Non-GAAP (1) $1.15 – $1.18 (1) Non-GAAP earnings per diluted share exclude $0.52 related to stock-based compensation expense, $0.30 for the amortization of acquisition related intangibles, $0.02 related to losses and (gains) on strategic investments, and $0.01 related to restructuring charges, net of tax.

The fourth quarter and full year fiscal 2015 outlook assume a projected annual effective tax rate of 31 percent and 26 percent for GAAP and non-GAAP results, respectively. These rates do not include one-time GAAP discrete items or the federal R&D tax credit that expired on December 31, 2013.

Earnings Conference Call and Webcast

Autodesk will host its third quarter conference call today at 5:00 p.m. ET. The live broadcast can be accessed at http://www.autodesk.com/investors. Supplemental financial information and prepared remarks for the conference call will be posted to the investor relations section of Autodesk’s website simultaneously with this press release.

NOTE: The prepared remarks will not be read on the conference call. The conference call will include only brief remarks followed by questions and answers.

A replay of the broadcast will be available at 7:00 pm ET at http://www.autodesk.com/investors. This replay will be maintained on Autodesk’s website for at least 12 months.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including statements in the paragraphs under “Business Outlook” above, statements regarding the impacts of our business model transition, and other statements regarding our strategies, market and products positions, performance, and results. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: general market, political, economic and business conditions; failure to maintain our revenue growth and profitability; failure to successfully manage transitions to new business models and markets, including the introduction of additional ratable revenue streams and our continuing efforts to attract customers to our cloud-based offerings and expenses related to the transition of our business model; failure to control our expenses; our performance in particular geographies, including emerging economies; the ability of governments around the world to meet their financial and debt obligations, and finance infrastructure projects; weak or negative growth in the industries we serve; slowing momentum in subscription billings or revenues; difficulty in predicting revenue from new businesses and the potential impact on our financial results from changes in our business models; difficulties encountered in integrating new or acquired businesses and technologies; the inability to identify and realize the anticipated benefits of acquisitions; the financial and business condition of our reseller and distribution channels; dependence on and the timing of large transactions; fluctuation in foreign currency exchange rates; the success of our foreign currency hedging program; failure to achieve sufficient sell-through in our channels for new or existing products; pricing pressure; unexpected fluctuations in our tax rate; the timing and degree of expected investments in growth and efficiency opportunities; changes in the timing of product releases and retirements; and any unanticipated accounting charges.

Further information on potential factors that could affect the financial results of Autodesk are included in Autodesk’s Annual Report on Form 10-K for the year ended January 31, 2014 and Quarterly Reports on Form 10-Q for the quarters ended April 30 and July 31, 2014, which are on file with the U.S. Securities and Exchange Commission. Autodesk does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Autodesk

Autodesk helps people imagine, design and create a better world. Everyone–from design professionals, engineers and architects to digital artists, students and hobbyists–uses Autodesk software to unlock their creativity and solve important challenges. For more information visit autodesk.com or follow @autodesk.

Autodesk is a registered trademark of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product and services offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document.

Autodesk, Inc. Condensed Consolidated Statements of Operations (In millions, except per share data) Three Months Ended October 31, Nine Months Ended October 31, 2014 2013 2014 2013 (Unaudited) Net revenue: License and other $ 320.5 $ 297.5 $ 987.1 $ 934.2 Subscription 297.5 257.7 860.5 753.1 Total net revenue 618.0 555.2 1,847.6 1,687.3 Cost of revenue: Cost of license and other revenue 51.9 43.4 154.6 130.6 Cost of subscription revenue 34.1 23.7 98.0 71.8 Total cost of revenue 86.0 67.1 252.6 202.4 Gross profit 532.0 488.1 1,595.0 1,484.9 Operating expenses: Marketing and sales 245.1 203.4 708.1 610.3 Research and development 183.9 149.0 533.7 448.7 General and administrative (1) 78.9 55.8 212.9 158.8 Amortization of purchased intangibles (1) 9.5 7.4 30.5 27.5 Restructuring charges, net — 4.4 3.1 6.5 Total operating expenses 517.4 420.0 1,488.3 1,251.8 Income from operations 14.6 68.1 106.7 233.1 Interest and other (expense) income, net (3.0 ) 1.1 (16.6 ) (9.5 ) Income before income taxes 11.6 69.2 90.1 223.6 Provision for income taxes (0.9 ) (11.6 ) (19.8 ) (48.7 ) Net income $ 10.7 $ 57.6 $ 70.3 $ 174.9 Basic net income per share $ 0.05 $ 0.26 $ 0.31 $ 0.78 Diluted net income per share $ 0.05 $ 0.25 $ 0.30 $ 0.77 Weighted average shares used in computing basic net income per share 226.9 223.1 227.1 223.4 Weighted average shares used in computing diluted net income per share 231.5 227.7 231.9 228.6

_____________________

(1) Effective in second quarter of fiscal 2015, Autodesk elected to present amortization of purchased customer relationships, trade names, patents, and user lists as a separate line item within operating expenses. As a result, amortization previously reflected in “General and Administrative” expense was reclassified to “Amortization of Purchased Intangibles” within Operating Expenses. Prior period amounts have been revised to conform to the current period presentation.