Public Company Information:
NASDAQ:
ADSK
SAN RAFAEL, Calif. – (BUSINESS WIRE) – Autodesk, Inc. (NASDAQ: ADSK) announced its financial results for the first quarter of fiscal 2017.
**First Quarter Fiscal 2017**
- Total subscriptions increased by 132,000 from the fourth quarter of fiscal 2016 to reach 2.71 million at the end of the first quarter. New model subscriptions rose by 140,000 to 567,000.
- Annualized recurring revenue (ARR) reached $1.44 billion, up 9% year-over-year and 12% on a constant currency basis. New model ARR was $308 million, increasing by 71% compared to the previous year and 76% on a constant currency basis.
- Deferred revenue grew by 32% to $1.52 billion, compared to $1.15 billion in the same period last year.
- Revenue totaled $512 million, a decrease of 21% compared to the previous year as reported, and 17% on a constant currency basis. This decline is attributed to the shift towards ratably recognized revenue and lower initial purchase prices for new offerings.
- Total GAAP spending (cost of revenue plus operating expenses) was $667 million, an increase of 7% compared to the previous year. A restructuring charge of $52 million was recorded during this quarter.
- Total non-GAAP spending was $539 million, a decrease of 2% compared to the previous year. The reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
- GAAP diluted net loss per share was $(0.77). In the same period last year, GAAP diluted net income per share was $0.08.
- Non-GAAP diluted net loss per share was $(0.10), compared to non-GAAP diluted net income per share of $0.30 in the first quarter of the previous year.
Carl Bass, President and CEO of Autodesk, stated, "We had a strong first quarter, continuing the momentum from the previous quarter and setting a solid foundation for the fiscal year. Our customers and partners are embracing our transition to a subscription-based business model and cloud-based software. We are managing costs diligently while investing in the transition, achieving a healthy balance between short-term and long-term goals."
**First Quarter Operational Overview**
Scott Herren, CFO of Autodesk, commented, "Our first quarter results reflect the success of our business model transition. We experienced significant growth in subscriptions, new model ARR, and deferred revenue. While revenue decreased as expected, recurring revenue now constitutes 70% of total revenue."
Total subscriptions were 2.71 million, a net increase of 132,000 from the fourth quarter of fiscal 2016. New model subscriptions (product, enterprise flexible license, and cloud subscription) were 567,000, a net increase of 140,000. Maintenance subscriptions were 2.14 million, a net decrease of 8,000 from the previous quarter.
Total ARR for the first quarter increased by 9% to $1.44 billion compared to the first quarter of the previous year, and 12% on a constant currency basis. New model ARR was $308 million, up 71% compared to the previous year and 76% on a constant currency basis. Maintenance ARR was $1.13 billion, decreasing by 1% compared to the previous year but increasing by 2% on a constant currency basis. Recurring revenue accounted for 70% of total revenue, up from 51% in the previous year.
During the business model transition, revenue has been negatively impacted due to more revenue being recognized ratably rather than upfront, and new product offerings generally having lower initial purchase prices. Autodesk discontinued new perpetual license sales for most individual products at the end of the fourth quarter of fiscal 2016.
Revenue in the Americas was $218 million, a decrease of 11% compared to the previous year as reported, and 10% on a constant currency basis. EMEA revenue was $203 million, a decrease of 17% compared to the previous year as reported, and 11% on a constant currency basis. Revenue in APAC was $92 million, a decrease of 42% compared to the previous year as reported, and 39% on a constant currency basis.
Revenue from the Architecture, Engineering, and Construction (AEC) segment was $219 million, a decrease of 8% compared to the previous year. Revenue from the Manufacturing segment was $158 million, a decrease of 14% compared to the previous year. Revenue from the Platform Solutions and Emerging Business (PSEB) segment was $100 million, a decrease of 46% compared to the previous year. Revenue from the Media and Entertainment (M&E) segment was $35 million, a decrease of 12% compared to the previous year.
**Business Outlook**
Autodesk's business outlook for the second quarter and full year fiscal 2017 assumes a continuation of the current economic environment and foreign exchange rate environment. A reconciliation between the fiscal 2017 GAAP and non-GAAP estimates is provided below or in the tables following this press release.
**Second Quarter Fiscal 2017**
| Q2 FY17 Guidance Metrics | Q2 FY17 (ending July 31, 2016) |
|----------------------------------|-------------------------------|
| Revenue (in millions) | $500 – $520 |
| EPS GAAP | ($0.73) – ($0.63) |
| EPS non-GAAP (1) | ($0.18) – ($0.11) |
(1) Non-GAAP earnings per diluted share exclude $0.26 related to stock-based compensation expense, between $0.12 and $0.09 related to GAAP-only tax charges, $0.09 related to restructuring charges and other facility exit costs, and $0.08 for the amortization of acquisition-related intangibles.
**Full Year Fiscal 2017**
| FY17 Guidance Metrics | FY17 (ending January 31, 2017) |
|------------------------------------|---------------------------------|
| Revenue (in millions) (1) | $1,950 – $2,050 |
| GAAP spend growth (cost of revenue plus operating expenses) | 3% – 4% |
| Non-GAAP spend growth (cost of revenue plus operating expenses) (2) | (1%) – flat |
| EPS GAAP | ($3.25) – ($2.87) |
| EPS non-GAAP (3) | ($0.95) – ($0.70) |
| Net subscription additions | 475,000 – 525,000 |
(1) Excluding the impact of foreign currency rates and hedge gains/losses, revenue guidance would be $1,995 – $2,095 million.
(2) Non-GAAP spend excludes $229 million related to stock-based compensation expense, $88 million related to restructuring charges and other facility exit costs, and $66 million for the amortization of acquisition-related intangibles.
(3) Non-GAAP earnings per diluted share excludes $1.02 related to stock-based compensation expense, between $0.59 and $0.46 of GAAP-only tax charges, $0.39 related to restructuring charges and other facility exit costs, and $0.30 for the amortization of acquisition-related intangibles.
The second quarter and full year fiscal 2017 outlook assumes a projected annual effective tax rate of (11)% and 26% for GAAP and non-GAAP results, respectively. Assumptions for the annual effective tax rate are regularly evaluated and may change based on changes in the projected geographic mix of earnings. At this stage of the business model transition, small shifts in geographic profitability significantly impact the effective tax rate.
**Earnings Conference Call and Webcast**
Autodesk will host its first 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.
A replay of the broadcast will be available at 7:00 p.m. ET at http://www.autodesk.com/investors. This replay will be maintained on Autodesk’s website for at least 12 months.
**Glossary of Terms**
- **Annualized Recurring Revenue (ARR):** Represents the annualized value of our average monthly recurring revenue for the preceding three months. “Maintenance plan ARR†captures ARR relating to traditional maintenance attached to perpetual licenses. “New Model ARR†captures ARR relating to new model subscription offerings. Recurring revenue acquired with the acquisition of a business may cause variability in the comparison of this calculation.
- **Constant Currency (CC) Growth Rates:** We attempt to represent the changes in the underlying business operations by eliminating fluctuations caused by changes in foreign currency exchange rates as well as eliminating hedge gains or losses recorded within the current and comparative periods. Our constant currency methodology removes all hedging gains and losses from the calculation and applies a constant exchange rate across periods.
**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 about our short-term and long-term goals, statements regarding the impacts and results of our business model transition, expectations regarding the transition of product offerings to subscription and acceptance by our customers and partners of subscriptions, statements regarding the impact of our restructuring activities, and other statements regarding our strategies, market and product 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: failure to achieve our revenue and profitability objectives; 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; difficulty in predicting revenue from new businesses and the potential impact on our financial results from changes in our business models; general market, political, economic and business conditions; the impact of non-cash charges on our financial results; fluctuation in foreign currency exchange rates; the success of our foreign currency hedging program; 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; 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; 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 fiscal year ended January 31, 2016, which is on file with the U.S. Securities and Exchange Commission. Autodesk disclaims 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 service 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.*
© 2016 Autodesk, Inc. All rights reserved.
**Financial Statements**
**Condensed Consolidated Statements of Operations**
**Three Months Ended April 30,**
**2016**
**2015**
Net revenue:
- Subscription: $326.0 / $319.8
- License and other: $185.9 / $326.7
- Total net revenue: $511.9 / $646.5
Cost of revenue:
- Cost of subscription revenue: $39.7 / $38.7
- Cost of license and other revenue: $52.8 / $53.1
- Total cost of revenue: $92.5 / $91.8
Gross profit: $419.4 / $554.7
Operating expenses:
- Marketing and sales: $242.9 / $253.9
- Research and development: $195.5 / $194.5
- General and administrative: $75.8 / $75.9
- Amortization of purchased intangibles: $7.9 / $8.9
- Restructuring charges and other facility exit costs, net: $52.3 / —
- Total operating expenses: $574.4 / $533.2
(Loss) income from operations: $(155.0) / $21.5
Interest and other (expense) income, net: $(3.6) / $0.3
(Loss) income before income taxes: $(158.6) / $21.8
Provision for income taxes: $(14.4) / $(2.7)
Net (loss) income: $(173.0) / $19.1
Basic net (loss) income per share: $(0.77) / $0.08
Diluted net (loss) income per share: $(0.77) / $0.08
Weighted average shares used in computing basic net (loss) income per share: 224.4 / 227.2
Weighted average shares used in computing diluted net (loss) income per share: 224.4 / 231.7
**Condensed Consolidated Balance Sheets**
**April 30, 2016**
**January 31, 2016**
Assets:
- Current assets: $2,629.0 / $2,993.1
- Marketable securities: $538.9 / $532.3
- Computer equipment, software, furniture and leasehold improvements, net: $174.9 / $169.3
- Developed technologies, net: $70.0 / $70.8
- Goodwill: $1,580.5 / $1,535.0
- Deferred income taxes, net: $9.8 / $9.2
- Other assets: $202.5 / $205.6
- Total assets: $5,205.6 / $5,515.3
Liabilities and Stockholders’ Equity:
- Current liabilities: $1,474.5 / $1,591.0
- Long term deferred revenue: $431.9 / $450.3
- Long term income taxes payable: $153.8 / $161.4
- Long term deferred income taxes: $78.1 / $67.7
- Long term notes payable, net: $1,488.4 / $1,487.7
- Other liabilities: $143.0 / $137.6
- Stockholders’ equity:
- Common stock and additional paid-in capital: $1,865.6 / $1,821.5
- Accumulated other comprehensive loss: $(121.5) / $(121.1)
- Retained earnings: $(308.2) / $(80.8)
- Total stockholders’ equity: $1,435.9 / $1,619.6
- Total liabilities and stockholders’ equity: $5,205.6 / $5,515.3
**Condensed Consolidated Statements of Cash Flows**
**Three Months Ended April 30,**
**2016**
**2015**
Operating activities:
- Net (loss) income: $(173.0) / $19.1
- Adjustments to reconcile net (loss) income to net cash provided by operating activities:
- Depreciation, amortization and accretion: $37.4 / $37.8
- Stock-based compensation expense: $56.9 / $50.2
- Deferred income taxes: $6.2 / $(5.3)
- Restructuring charges and other facility exit costs, net: $52.3 / —
- Other operating activities: $8.3 / $(3.5)
- Changes in operating assets and liabilities, net of acquisitions:
- Accounts receivable: $397.4 / $143.1
- Prepaid expenses and other current assets: $(14.9) / $(22.4)
- Accounts payable and accrued liabilities: $(197.2) / $(110.8)
- Deferred revenue: $4.1 / $(3.4)
- Accrued income taxes: $(13.1) / $(18.3)
- Net cash provided by operating activities: $164.4 / $86.5
Investing activities:
- Purchases of marketable securities: $(577.5) / $(485.2)
- Sales of marketable securities: $107.6 / $97.5
- Maturities of marketable securities: $322.6 / $192.4
- Capital expenditures: $(22.3) / $(12.5)
- Acquisitions, net of cash acquired: $(59.6) / $(34.5)
- Other investing activities: $(1.0) / $(10.6)
- Net cash (used in) investing activities: $(230.2) / $(252.9)
Financing activities:
- Proceeds from issuance of common stock, net of issuance costs: $51.2 / $57.2
- Taxes paid related to net share settlement of equity awards: $(18.3) / $(23.1)
- Repurchase and retirement of common stock: $(100.1) / $(95.4)
- Net cash (used in) financing activities: $(67.2) / $(61.3)
Effect of exchange rate changes on cash and cash equivalents: $3.4 / $(0.2)
Net (decrease) in cash and cash equivalents: $(129.6) / $(227.9)
Cash and cash equivalents at beginning of the period: $1,353.0 / $1,410.6
Cash and cash equivalents at end of the period: $1,223.4 / $1,182.7
**Reconciliation of GAAP financial measures to non-GAAP financial measures**
To supplement our consolidated financial statements presented on a GAAP basis, Autodesk provides investors with certain non-GAAP measures including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, and non-GAAP diluted shares used in per share calculation. These non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, restructuring charges and other facility exit costs, amortization of purchased intangibles, gain and loss on strategic investments, and related income tax expenses. See our reconciliation of GAAP financial measures to non-GAAP financial measures herein. We believe these exclusions are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with our historical operating results. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of Autodesk’s underlying operational results and trends and our marketplace performance. For example, non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among the indicators management uses as a basis for our planning and forecasting of future periods.
There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.
The following table shows Autodesk’s non-GAAP results reconciled to GAAP results included in this release.
**Three Months Ended April 30,**
**2016**
**2015**
GAAP cost of subscription revenue: $39.7 / $38.7
Stock-based compensation expense: $(1.7) / $(1.4)
Amortization of developed technology: $(0.3) / $(1.1)
Non-GAAP cost of subscription revenue: $37.7 / $36.2
GAAP cost of license and other revenue: $52.8 / $53.1
Stock-based compensation expense: $(1.8) / $(1.5)
Amortization of developed technology: $(10.6) / $(12.4)
Non-GAAP cost of license and other revenue: $40.4 / $39.2
GAAP gross profit: $419.4 / $554.7
Stock-based compensation expense: $3.5 / $2.9
Amortization of developed technology: $10.9 / $13.5
Non-GAAP gross profit: $433.8 / $571.1
GAAP marketing and sales: $242.9 / $253.9
Stock-based compensation expense: $(23.6) / $(21.7)
Non-GAAP marketing and sales: $219.3 / $232.2
GAAP research and development: $195.5 / $194.5
Stock-based compensation expense: $(20.9) / $(17.6)
Non-GAAP research and development: $174.6 / $176.9
GAAP general and administrative: $75.8 / $75.9
Stock-based compensation expense: $(8.9) / $(8.0)
Non-GAAP general and administrative: $66.9 / $67.9
GAAP amortization of purchased intangibles: $7.9 / $8.9
Amortization of purchased intangibles: $(7.9) / $(8.9)
Non-GAAP amortization of purchased intangibles: $— / $—
GAAP restructuring charges and other facility exit costs, net: $52.3 / $—
Restructuring charges and other facility exit costs, net: $(52.3) / $—
Non-GAAP restructuring charges and other facility exit costs, net: $— / $—
GAAP operating expenses: $574.4 / $533.2
Stock-based compensation expense: $(53.4) / $(47.3)
Amortization of purchased intangibles: $(7.9) / $(8.9)
Restructuring charges and other facility exit costs, net: $(52.3) / $—
Non-GAAP operating expenses: $460.8 / $477.0
GAAP (loss) income from operations: $(155.0) / $21.5
Stock-based compensation expense: $56.9 / $50.2
Amortization of developed technology: $10.9 / $13.5
Amortization of purchased intangibles: $7.9 / $8.9
Restructuring charges and other facility exit costs, net: $52.3 / $—
Non-GAAP (loss) income from operations: $(27.0) / $94.1
GAAP interest and other (expense) income, net: $(3.6) / $0.3
Gain on strategic investments: $(0.5) / $(1.0)
Non-GAAP interest and other (expense), net: $(4.1) / $(0.7)
GAAP (provision) for income taxes: $(14.4) / $(2.7)
Discrete GAAP tax (provision) items: $(1.9) / $(3.1)
Income tax effect of non-GAAP adjustments: $24.4 / $(18.5)
Non-GAAP benefit (provision) for income tax: $8.1 / $(24.3)
GAAP net (loss) income: $(173.0) / $19.1
Stock-based compensation expense: $56.9 / $50.2
Amortization of developed technology: $10.9 / $13.5
Amortization of purchased intangibles: $7.9 / $8.9
Restructuring charges and other facility exit costs, net: $52.3 / $—
(Gain) on strategic investments: $(0.5) / $(1.0)
Discrete GAAP tax benefit (provision) items: $(1.9) / $(3.1)
Income tax effect of non-GAAP adjustments: $24.4 / $(18.5)
Non-GAAP net (loss) income: $(23.0) / $69.1
GAAP diluted net (loss) income per share: $(0.77) / $0.08
Stock-based compensation expense: $0.25 / $0.21
Amortization of developed technology: $0.05 / $0.06
Amortization of purchased intangibles: $0.04 / $0.04
Restructuring charges and other facility exit costs, net: $0.23 / $—
(Gain) on strategic investments: $— / $—
Discrete GAAP tax (provision) items: $(0.01) / $(0.01)
Income tax effect of non-GAAP adjustments: $0.11 / $(0.08)
Non-GAAP diluted net (loss) income per share: $(0.10) / $0.30
GAAP diluted shares used in per share calculation: 224.4 / 231.7
Shares included in non-GAAP net income per share, but excluded from GAAP net loss per share as they would have been anti-dilutive: $— / $—
Non-GAAP diluted weighted average shares used in per share calculation: 224.4 / 231.7
Contact:
Autodesk, Inc.
Investors:
David Gennarelli, 415-507-6033
david.
or
Press:
Noah Cole, 415-580-3535
noah.
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