Autodesk Reports Second Quarter Results
Autodesk Reports Second Quarter Results
SAN RAFAEL, Calif.--(BUSINESS WIRE)-- Autodesk, Inc. (NAS: ADSK) today reported financial results for the second quarter of fiscal 2014.
Second Quarter Fiscal 2014
Revenue was $562 million, a decrease of 1 percent, compared to the second quarter of fiscal 2013 as reported and an increase of 2 percent on a constant currency basis.
GAAP operating margin was 15 percent, compared to 16 percent in the second quarter of fiscal 2013.
Non-GAAP operating margin decreased by approximately 100 basis points to 24 percent, compared with 25 percent in the second quarter of fiscal 2013. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
GAAP diluted earnings per share were $0.27, compared to $0.28 in the second quarter of fiscal 2013.
Non-GAAP diluted earnings per share were $0.45, compared to $0.48 in the second quarter of fiscal 2013.
Deferred revenue increased 7 percent to $806 million, compared to the second quarter of fiscal 2013.
Cash flow from operating activities was $65 million, compared to $107 million in the second quarter of fiscal 2013.
"Our second quarter was marked by strength in our Architecture, Engineering and Construction (AEC) business segment and continued growth in suites," said Carl Bass, Autodesk president and CEO. "Growth in these vital areas was offset by mixed contributions from other parts of the business. On the product side, we strengthened and expanded our leading product portfolio with new desktop, cloud and mobile offerings."
Second Quarter Operational Overview
EMEA revenue decreased 4 percent to $202 million compared to the second quarter last year as reported and was flat on a constant currency basis. Revenue in the Americas increased 2 percent to $202 million compared to the second quarter last year as reported. Revenue in Asia Pacific decreased 1 percent to $158 million compared to the second quarter last year as reported and increased 4 percent on a constant currency basis. Revenue from emerging economies decreased 2 percent to $86 million compared to the second quarter last year as reported and 1 percent on a constant currency basis. Revenue from emerging economies represented 15 percent of total revenue in the second quarter.
Revenue from the Platform Solutions and Emerging Business segment decreased 9 percent to $197 million compared to the second quarter last year. Revenue from the AEC business segment increased 9 percent to $177 million compared to the second quarter last year. Revenue from the Manufacturing business segment increased 2 percent to $144 million compared to the second quarter last year. Revenue from the Media and Entertainment business segment decreased 11 percent to $43 million compared to the second quarter last year.
Revenue from Flagship products decreased 11 percent to $289 million compared to the second quarter last year. Revenue from Suites increased 18 percent to $193 million compared to the second quarter last year. Revenue from New and Adjacent products was $80 million, and decreased 1 percent compared to the second quarter last year.
"The challenging dynamics within some of the end-markets that we serve has led us to adjust our growth assumptions," said Mark Hawkins, Autodesk executive vice president and CFO. "While the near-term revenue target is lower, we remain diligent about managing our spend while making essential investments to drive growth.
"With the recent introduction of more flexible license and service offerings that have ratable revenue streams, such as cloud-based and rental license offerings, Autodesk's business model is evolving," continued Hawkins. "We are currently refining our plans around the pace and time frame for this business model transition. We look forward to providing more detail at our Investor Day event scheduled for October 2nd. As we evolve our business model, we remain committed to long-term operating margin expansion."
Business Outlook
The following statements are forward-looking statements that are based on current expectations and assumptions, and involve risks and uncertainties some of which are set forth below. Autodesk's business outlook for the third quarter assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment, and interest expense related to Autodesk's $750 million debt offering in December 2012.
Third Quarter Fiscal 2014
3Q FY14 Guidance Metrics | Q3 FY14 (ending October 31, 2013) | ||||
Revenue (in millions) | $540-$555 | ||||
EPS GAAP | $0.19-$0.23 | ||||
EPS Non-GAAP | $0.36-$0.40 | ||||
Non-GAAP earnings per diluted share exclude $0.11 related to stock-based compensation expense and $0.06 for the amortization of acquisition related intangibles.
Third quarter fiscal 2014 outlook assumes annual effective tax rates of approximately 23 percent and approximately 25 percent for GAAP and non-GAAP results, respectively. These rates do not include one-time discrete items but do reflect the recently enacted extension of the federal R&D tax credit benefit through December 31, 2013.
Full Year Fiscal 2014
Autodesk is not providing full year fiscal 2014 guidance at this time.
Earnings Conference Call and Webcast
Autodesk will host its second 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 revenue growth, managing expenses while making essential investments, long-term margin expansion, future products, business model evolution, 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 maintain cost reductions and productivity increases or otherwise 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; 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; 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; failure of key new applications to achieve anticipated levels of customer acceptance; failure to achieve continued success in technology advancements, interruptions or terminations in the business of Autodesk consultants; the expense or impact of legal or regulatory proceedings; 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, 2013 and Form 10-Q for the quarter ended April 30, 2013, 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.
© 2013 Autodesk, Inc. All rights reserved.
Autodesk, Inc. | ||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||
(In millions, except per share data) | ||||||||||||||||
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(Unaudited) | ||||||||||||||||
Net revenue (1): | ||||||||||||||||
License and other | $ | 313.2 | $ | 334.0 | $ | 636.7 | $ | 689.2 | ||||||||
Subscription | 248.5 | 234.7 | 495.4 | 468.1 | ||||||||||||
Total net revenue | 561.7 | 568.7 | 1,132.1 | 1,157.3 | ||||||||||||
Cost of revenue (1): | ||||||||||||||||
Cost of license and other revenue | 42.8 | 42.5 | 87.2 | 83.3 | ||||||||||||
Cost of subscription revenue | 25.0 | 17.3 | 48.1 | 35.3 | ||||||||||||
Total cost of revenue | 67.8 | 59.8 | 135.3 | 118.6 | ||||||||||||
Gross profit | 493.9 | 508.9 | 996.8 | 1,038.7 | ||||||||||||
Operating expenses: | ||||||||||||||||
Marketing and sales | 198.1 | 212.4 | 406.9 | 435.6 | ||||||||||||
Research and development | 148.9 | 144.9 | 299.7 | 297.6 | ||||||||||||
General and administrative | 61.6 | 58.7 | 123.1 | 118.6 | ||||||||||||
Restructuring charges, net | 1.7 | — | 2.1 | — | ||||||||||||
Total operating expenses | 410.3 | 416.0 | 831.8 | 851.8 | ||||||||||||
Income from operations | 83.6 | 92.9 | 165.0 | 186.9 | ||||||||||||
Interest and other (expense) income, net | (1.8 | ) | (0.8 | ) | (10.6 | ) | 2.7 | |||||||||
Income before income taxes | 81.8 | 92.1 | 154.4 | 189.6 | ||||||||||||
Provision for income taxes | (20.1 | ) | (27.5 | ) | (37.1 | ) | (46.1 | ) | ||||||||
Net income | $ | 61.7 | $ | 64.6 | $ | 117.3 | $ | 143.5 | ||||||||
Basic net income per share | $ | 0.28 | $ | 0.28 | $ | 0.52 | $ | 0.63 | ||||||||
Diluted net income per share | $ | 0.27 | $ | 0.28 | $ | 0.51 | $ | 0.62 | ||||||||
Weighted average shares used in computing basic net income per share | 223.1 | 227.8 | 223.6 | 228.0 | ||||||||||||
Weighted average shares used in computing diluted net income per share | 228.3 | 232.1 | 229.3 | 233.1 | ||||||||||||
___________ | ||
(1) | Effective in the first quarter of fiscal 2014, Autodesk reclassified certain revenue and cost of revenue amounts associated with its cloud service offerings from "License and Other Revenue" to its new revenue line item "Subscription Revenue." Subscription Revenue consists of two components: maintenance revenue for our software products and revenue for our cloud service offerings including Autodesk 360. Prior period amounts have been revised to conform to the current period presentation. | |
Autodesk, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In millions) | ||||||||
July 31, 2013 | January 31, 2013 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,401.0 | $ | 1,612.2 | ||||
Marketable securities | 596.9 | 342.1 | ||||||
Accounts receivable, net | 303.9 | 495.1 | ||||||
Deferred income taxes | 51.6 | 42.2 | ||||||
Prepaid expenses and other current assets | 83.1 | 60.8 | ||||||
Total current assets | 2,436.5 | 2,552.4 | ||||||
Marketable securities | 410.1 | 411.1 | ||||||
Computer equipment, software, furniture and leasehold improvements, net | 133.4 | 114.9 | ||||||
Purchased technologies, net | 63.1 | 76.0 | ||||||
Goodwill | 903.2 | 871.5 | ||||||
Deferred income taxes, net | 125.3 | 122.8 | ||||||
Other assets | 151.7 | 159.7 | ||||||
$ | 4,223.3 | $ | 4,308.4 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 74.4 | $ | 94.2 | ||||
Accrued compensation | 125.7 | 189.6 | ||||||
Accrued income taxes | 42.5 | 13.9 | ||||||
Deferred revenue | 636.9 | 647.0 | ||||||
Other accrued liabilities | 76.4 | 99.0 | ||||||
Total current liabilities | 955.9 | 1,043.7 | ||||||
Deferred revenue | 168.6 | 187.6 | ||||||
Long term income taxes payable | 203.4 | 194.2 | ||||||
Long term notes payable, net of discount | 746.0 | 745.6 | ||||||
Other liabilities | 98.3 | 94.1 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock and additional paid-in capital | 1,455.8 | 1,449.8 | ||||||
Accumulated other comprehensive loss | (7.5 | ) | (5.7 | ) | ||||
Retained earnings | 602.8 | 599.1 | ||||||
Total stockholders' equity | 2,051.1 | 2,043.2 | ||||||
$ | 4,223.3 | $ | 4,308.4 | |||||
Autodesk, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In millions) | ||||||||
Six Months Ended July 31, | ||||||||
2013 | 2012 | |||||||
(Unaudited) | ||||||||
Operating activities: | ||||||||
Net income | $ | 117.3 | $ | 143.5 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and accretion | 65.1 | 58.1 | ||||||
Stock-based compensation expense | 64.6 | 66.9 | ||||||
Excess tax benefits from stock-based compensation | (3.2 | ) | (28.1 | ) | ||||
Restructuring charges, net | 2.1 | — | ||||||
Other operating activities | 2.0 | 3.9 | ||||||
Changes in operating assets and liabilities, net of business combinations | 41.5 | 2.1 | ||||||
Net cash provided by operating activities | 289.4 | 246.4 | ||||||
Investing activities: | ||||||||
Purchases of marketable securities | (697.3 | ) | (725.3 | ) | ||||
Sales of marketable securities | 215.1 | 138.9 | ||||||
Maturities of marketable securities | 231.9 | 250.5 | ||||||
Capital expenditures | (42.6 | ) | (28.2 | ) | ||||
Acquisitions, net of cash acquired | (47.2 | ) | (69.2 | ) | ||||
Other investing activities | (5.4 | ) | (18.0 | ) | ||||
Net cash used in investing activities | (345.5 | ) | (451.3 | ) | ||||
Financing activities: | ||||||||
Proceeds from issuance of common stock, net of issuance costs | 79.8 | 158.8 | ||||||
Repurchases of common stock | (239.8 | ) | (210.3 | ) | ||||
Excess tax benefits from stock-based compensation | 3.2 | 28.1 | ||||||
Net cash (used in) provide by financing activities | (156.8 | ) | (23.4 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1.7 | 1.6 | ||||||
Net increase (decrease) in cash and cash equivalents | (211.2 | ) | (226.7 | ) | ||||
Cash and cash equivalents at beginning of fiscal year | 1,612.2 | 1,156.9 | ||||||
Cash and cash equivalents at end of period | $ | 1,401.0 | $ | 930.2 | ||||
