Strong ARR Growth Highlights Autodesk Third Quarter Results

Company Announces Restructuring Plan to Focus on Strategic Priorities

(PRNewswire) —   Autodesk, Inc. (NASDAQ: ADSK) today reported financial results for the third quarter of fiscal 2018.

Third Quarter Fiscal 2018

  • Subscription plan (formerly known as new model) annualized recurring revenue (ARR) was $924 million and increased 106 percent compared to the third quarter last year as reported, and 108 percent on a constant currency basis.
  • Total ARR was $1.90 billion, an increase of 24 percent compared to the third quarter last year as reported, and 25 percent on a constant currency basis.
  • Subscription plan subscriptions increased 307,000 from the second quarter of fiscal 2018 to 1.9 million at the end of the third quarter. Subscription plan subscriptions benefited from 110,000 maintenance subscribers that converted to product subscription under the maintenance-to-subscription program.
  • Total subscriptions increased 146,000 from the second quarter of fiscal 2018 to 3.6 million at the end of the third quarter.
  • Deferred revenue increased 15 percent to $1.76 billion, compared to $1.53 billion in the third quarter last year. Unbilled deferred revenue at the end of the third quarter was $148 million.
  • Revenue was $515 million, an increase of 5 percent compared to the third quarter last year as reported, and 6 percent on a constant currency basis.
  • Total GAAP spend (cost of revenue plus operating expenses) was $615 million, an increase of 1 percent compared to the third quarter last year.
  • Total non-GAAP spend was $542 million, an increase of 2 percent compared to the third quarter last year. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
  • GAAP diluted net loss per share was $(0.55), compared to GAAP diluted net loss per share of $(0.64) in the third quarter last year.
  • Non-GAAP diluted net loss per share was $(0.12), compared to non-GAAP diluted net loss per share of $(0.18) in the third quarter last year.

"We are pleased with another solid quarter of execution and progress on our business model transition," said Andrew Anagnost, Autodesk president and CEO.  "We're experiencing healthy trends in several key transition metrics, including ARR and deferred revenue growth, as customers continue to embrace our new subscription offerings.  As we enter the growth phase of our model transition, we need to re-balance investments to focus on our strategic priorities. This includes divesting from some areas and increasing our investment in others.  We're taking this restructuring action from a position of strength.  This is not a cost reduction activity as we maintain our commitment to keep total non-GAAP spend flat this year and next."

"Our third quarter results mark our return to revenue growth as we reached the one year mark of subscription-only sales," said Scott Herren, Autodesk CFO.  "We are excited to have reached a significant milestone where the base of subscription plan subscriptions has surpassed the base of maintenance plan subscriptions for the first time.  We are also experiencing early success with the maintenance-to-subscription program, which is a winning combination for both our customers and Autodesk.  Our solid third quarter results and stable macro operating environment keep us confident in our near-term and long-term goals."

Third Quarter Operational Overview

Subscription plan ARR was $924 million and increased 106 percent compared to the third quarter last year as reported, and 108 percent on a constant currency basis.  Subscription plan ARR includes $70 million related to the maintenance-to-subscription program.  Maintenance plan ARR was $978 million and decreased 10 percent compared to the third quarter last year as reported, and on a constant currency basis.  Total ARR for the third quarter increased 24 percent to $1.90 billion compared to the third quarter last year as reported, and 25 percent on a constant currency basis.

Subscription plan subscriptions (product, EBA, and cloud) were 1.90 million, a net increase of 307,000 from the second quarter of fiscal 2018, led by new product subscriptions and 110,000 product subscriptions that migrated from maintenance plan subscriptions.  Maintenance plan subscriptions were 1.69 million, a net decrease of 161,000 from the second quarter of fiscal 2018, which includes the 110,000 that migrated to product subscription.  Total subscriptions were 3.59 million, a net increase of 146,000 from the second quarter of fiscal 2018.   

Total recurring revenue in the third quarter was 92 percent of total revenue compared to 78 percent of total revenue in the third quarter last year.

Revenue in the Americas was $215 million, an increase of 1 percent compared to the third quarter last year. Revenue in EMEA was $205 million, an increase of 8 percent compared to the third quarter last year as reported, and 10 percent on a constant currency basis. Revenue in APAC was $95 million, an increase of 12 percent compared to the third quarter last year as reported, and 10 percent on a constant currency basis.

Restructuring

Autodesk today announced a restructuring plan to focus on the company's strategic priorities of completing the subscription transition; digitizing the company; and re-imagining manufacturing, construction, and production.  Through the restructuring, Autodesk seeks to streamline the organization and re-balance resources to better align with the company's priorities.  By realigning its investments, Autodesk is positioning itself to meet its long-term goals, including keeping non-GAAP spend flat in fiscal 2019.

The company anticipates taking a pre-tax restructuring charge in the range of $135 million to $149 million.  Approximately $91 million to $100 million in pre-tax charges will be taken in the fourth quarter of fiscal 2018.  The remaining charge will be taken in fiscal 2019.

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 under "Safe Harbor Statement."  Autodesk's business outlook for the fourth quarter and full year fiscal 2018 assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment.  A reconciliation between the fiscal 2018 GAAP and non-GAAP estimates is provided below or in the tables following this press release.

Fourth Quarter Fiscal 2018


Q4 FY18 Guidance Metrics

Q4 FY18 (ending January 31, 2018)

Revenue (in millions)

$537 - $547

EPS GAAP

($1.18) - ($1.11)

EPS non-GAAP (1)

($0.14) - ($0.10)


(1) Non-GAAP earnings per diluted share excludes $0.43 related to restructuring and other facility exit costs, $0.29 related to stock-based compensation expense, between $0.28 and $0.25 related to GAAP-only tax charges, and $0.04 for the amortization of acquisition-related intangibles.


Full Year Fiscal 2018


FY18 Guidance Metrics

FY18 (ending January 31, 2018)

Revenue (in millions) (1)

$2,040 - $2,050

GAAP spend growth (cost of revenue plus operating expenses)

Approx. +1%

Non-GAAP spend growth (cost of revenue plus operating expenses) (2)

Approx. flat

EPS GAAP

($2.98) - ($2.93)

EPS non-GAAP (3)

($0.53) - ($0.49)

Net subscription additions

625k - 650k

Total ARR

24% - 26%



(1) Excluding the impact of foreign currency exchange rates and hedge gains/losses, revenue guidance would be $2.045 - $2.055 billion.

(2) Non-GAAP spend excludes $248 million related to stock-based compensation expense, $96 million related to restructuring and other facility exit costs, $36 million for the amortization of acquisition-related intangibles, and $22 million related to CEO transition costs. 

(3) Non-GAAP earnings per diluted share excludes $1.13 related to stock-based compensation expense, between $0.57 and $0.56 related to GAAP-only tax charges, $0.44 related to restructuring and other facility exit costs, $0.17 for the amortization of acquisition-related intangibles, $0.10 related to CEO transition costs, and $0.04 related to losses on strategic investments and dispositions.


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