Summary
Autodesk reported fiscal 2011 first quarter revenue of $474.6 million, up 11.5% from the prior-year quarter. Gross profit rose 13.3% to $423.3 million, and gross margin was 89.2%, up 1.5 percentage points. The company swung to operating income of $50.8 million from a loss in the prior-year quarter, with operating margin at 10.7%, up 15.3 percentage points. Net income was $36.9 million, also a swing to profit, and diluted EPS was $0.16. Operating cash flow was $139.1 million, up 411.4%. Capital expenditures were $5.8 million, down 57.4%. Deferred revenue was $470.6 million, up 3.9%. The MD&A attributes the improvement to better global demand, cost controls, lower restructuring charges, and the absence of a goodwill impairment charge that hurt the prior-year quarter.
Operational trends were mixed by product and region. License and other revenue rose 15%, and maintenance revenue rose 7%. Commercial new seat revenue increased 24%, with 28 percentage points from more seats sold and a 4 percentage point drag from lower average net revenue per seat. Upgrade revenue rose 18%, helped by a promotion before the March 2010 upgrade price increase. Net maintenance billings increased 26%, and total program enrollment was about 2.4 million users. Backlog was $565.3 million at April 30, 2010, up from $542.5 million at January 31, 2010. EMEA revenue rose 19% and APAC revenue rose 21%, while Americas revenue fell 1%. Emerging economies revenue increased 15% and represented 14% of net revenue. By segment, PSEB rose 18%, AEC rose 7%, Manufacturing rose 15%, and Media and Entertainment fell 4%. Tech Data accounted for 17% of consolidated net revenue.
Guidance is limited. Autodesk decided not to provide revenue guidance beyond the second quarter of fiscal 2011 because of general instability in the European economy. For the second quarter of fiscal 2011, the company expects operating margin percentage to increase compared with the second quarter of fiscal 2010, driven by higher net revenue and lower restructuring charges. It also expects net cash flows provided by operating activities to be higher in the second quarter of fiscal 2011 than in the same period of the prior fiscal year. The company initiated a restructuring plan in the first quarter of fiscal 2011 that is expected to reduce staff by approximately 210 to 230 positions and record restructuring charges of approximately $10.0 million to $12.0 million during fiscal 2011. In the first quarter, it reduced about 120 positions. Total spend decreased $21.4 million, or 5%. The company repurchased 2.0 million shares for $58.8 million. The company said its existing balances, anticipated cash flows, and credit facility should meet working capital needs for the next 12 months.
Risks remain significant. The company cites general instability in the European economy, foreign currency fluctuations, and a fixed cost structure that makes operating margins sensitive to revenue changes. It relies on major distributors, including Tech Data, and faces risks in emerging economies such as economic volatility, geopolitical risk, intellectual property protection, and software piracy. Goodwill impairment could return if revenue and cash flow projections decline. Product returns, tax rate volatility, and illiquid investments also pose risks. The International Fund investment had an estimated fair value of $10.0 million and is not currently liquid. Auction rate securities had an estimated fair value of $7.6 million and also lack liquidity. The company warns that one-time benefits from a promotion and extended vendor payment terms are not expected to recur. Days sales outstanding was 42 days at April 30, 2010, down from 55 days at January 31, 2010.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2011 | Q4 FY2010 | QoQ | Q1 FY2010 | YoY |
|---|---|---|---|---|---|
| Revenue | $474.6M | — | — | — | — |
| Gross profit | $423.3M | — | — | — | — |
| Gross margin | 89.2% | — | — | — | — |
| Research & development | $127.2M | — | — | — | — |
| Sales & marketing | $186.5M | — | — | — | — |
| General & administrative | $51.7M | — | — | — | — |
| Total operating expenses | $372.5M | — | — | — | — |
| Operating income (loss) | $50.8M | — | — | — | — |
| Operating margin | 10.7% | — | — | — | — |
| Net income (loss) | $36.9M | — | — | — | — |
| Net margin | 7.8% | — | — | — | — |
| Diluted EPS | $0.16 | — | — | — | — |
Risks
Weakness in the global economy and the recent financial crisis may continue to impact business, financial results and financial condition. MD&A states global demand improved in the quarter ended April 30, 2010, but confidence in fiscal 2011 revenue forecasts remains limited due to general instability of the European economy, and Autodesk decided not to provide revenue guidance beyond the second quarter of fiscal 2011.
A significant portion of revenue is generated through maintenance revenue, and decreases in maintenance attach or renewal rates or in new license sales negatively impact future revenue. MD&A reports maintenance revenue increased 7% in the quarter ended April 30, 2010, but year-over-year decreases in net maintenance billings during the second and third quarters of fiscal 2010 could cause downward pressure on future maintenance revenue.
Approximately 87% of revenue for the quarter ended April 30, 2010 was derived from indirect channel sales through distributors and resellers, and Tech Data accounted for 17% and 14% of consolidated net revenue for the quarters ended April 30, 2010 and 2009, respectively. Insolvency or loss of major distributors could harm revenue and delay recognition of future sales.
Combined revenue from AutoCAD and AutoCAD LT represented 36% of consolidated net revenue during the quarter ended April 30, 2010. Any factor adversely affecting sales of these products, including product release cycle, market acceptance, or competition, would likely harm operating results.
International net revenue represented 73% and 69% of net revenue during the quarters ended April 30, 2010 and 2009, respectively, exposing Autodesk to economic volatility, geopolitical risk, intellectual property protection, software piracy, currency, and tax risks. MD&A notes revenue from emerging economies increased 15% and represented 14% of net revenue in the quarter ended April 30, 2010.
Autodesk is exposed to fluctuations in currency exchange rates that could negatively impact financial results and cash flows. MD&A reports a loss on foreign currency of $7.2 million in the quarter ended April 30, 2010 compared to $0.6 million in the prior-year quarter, and on a constant currency basis net revenue would have increased 7% versus 11% as reported.
Actions taken to reduce cost structure may not be as effective as anticipated and may eliminate critical elements of operations. MD&A reports restructuring charges of $7.1 million in the quarter ended April 30, 2010 and $16.5 million in the prior-year quarter, with the Fiscal 2011 Plan expected to reduce approximately 210 to 230 positions and record charges of approximately $10.0 million to $12.0 million during fiscal 2011.
Changes in tax rules or practices may adversely affect results of operations. MD&A reports an effective tax rate of 22% in the quarter ended April 30, 2010 and negative 65% in the prior-year quarter, with the prior-year quarter including a $20.9 million discrete non-cash tax charge from a change in expected future tax rates and a valuation allowance against certain California deferred tax assets.
Autodesk is subject to litigation and regulatory inquiries, and the number and significance of these disputes have increased as the business has evolved. MD&A reports general and administrative expenses increased 3% in the quarter ended April 30, 2010 primarily due to an increase in professional fees related to litigation costs.
The investment portfolio is subject to interest rate trends, market volatility, and illiquidity. MD&A reports $10.0 million in the International Fund is not currently liquid and $7.6 million in auction rate securities have failed to settle in auctions since August 2007, so Autodesk may be unable to access these funds if needed.
Strategy to develop and introduce new product and service offerings exposes Autodesk to limited customer acceptance, product defects, and large expenditures that may not result in additional net revenue. MD&A notes model-based design products revenue increased 13% and represented 29% of total revenue in the quarter ended April 30, 2010, and failure to expand AutoCAD customers to vertical and model-based design products would adversely affect growth.
SaaS KPIs
All quarters →Deferred Revenue
Aggregate backlog
Net maintenance billings
Total Program Enrollment
Summary, forecast, risks and KPIs are extracted from Autodesk, Inc.'s SEC filings for Q1 FY2011 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 15, 2026.