Summary
Autodesk reported mixed FY2015 first quarter results. Revenue rose to $592.5 million, up 3.9% from the prior-year quarter. Gross profit increased 2.2% to $513.8 million. But operating income fell 48.2% to $42.2 million. Net income dropped 49.1% to $28.3 million. Diluted EPS declined 50% to $0.12. Gross margin slipped to 86.7%, a decrease of 1.4 percentage points. Operating margin fell to 7.1%, down 7.1 percentage points. The profit decline reflects the company's ongoing business model transition, which shifts revenue to ratable streams while expenses rise. Operating expenses grew 12% and cost of revenue grew 17% in the quarter.
Operationally, the quarter showed progress in subscriptions and billings. Billings increased 10% compared with the prior-year quarter. Total subscriptions reached approximately 1.94 million at April 30, 2014, up from 1.85 million at January 31, 2014. Suites revenue grew 19% and represented 35% of revenue, up from 31% in the prior-year quarter. Revenue from emerging countries increased 5% and accounted for 13% of revenue in both periods. The AEC and MFG segments grew, while the M&E segment declined. Flagship products made up 50% of revenue and decreased 4%. New and adjacent products were 14% of revenue and increased 2%. The company added flexible license offerings, including term-based desktop subscriptions, to expand its customer base.
Cash flow and deferred revenue provided some balance. Operating cash flow was $218.7 million, down 2.4% from the prior-year quarter. Capital expenditures were $14.5 million, down 43.8%. Deferred revenue rose 13.0% to $749.7 million. On a non-GAAP basis, gross profit was $528.5 million, income from operations was $102.0 million, net income was $73.8 million, and diluted EPS was $0.32. These non-GAAP figures exclude stock-based compensation, amortization of purchased intangibles, restructuring charges, and other items. The gap between GAAP and non-GAAP results highlights the weight of these expenses on reported profitability.
Guidance points to continued transition pressure. For the second quarter of fiscal 2015, Autodesk expects non-GAAP diluted earnings per share of $0.25 to $0.30, which excludes $0.11 related to stock-based compensation expense and $0.09 related to the amortization of acquisition related intangibles, net of tax. For the full fiscal year 2015, the company expects billings to increase by approximately 7% to 9% and non-GAAP operating margin to be approximately 14% to 16%. Autodesk plans to add 150,000 to 200,000 subscriptions during fiscal 2015. Management expects the transition to reduce traditional perpetual license revenue without a corresponding decrease in expenses, and it expects GAAP profitability to stay under pressure while the mix shifts. Over the next four years, the company aims to significantly increase its subscription base and the annual value per subscription, which it believes will drive billings growth.
Risks remain substantial. The business model shift could continue to pressure operating margin and earnings per share as more revenue is recognized ratably. Foreign exchange negatively affected revenue in the quarter; on a constant currency basis, net revenue would have increased 5%. The company relies on major distributors, with Tech Data accounting for 26% of total net revenue in the quarter and 25% in the prior-year quarter. Emerging economies present growth opportunities but also carry economic volatility, geopolitical risk, local competition, intellectual property protection concerns, and software piracy. Autodesk also faces integration challenges from acquisitions and potential tax rate volatility. The company believes its existing balances, anticipated cash flows, and credit facility will meet working capital needs for at least the next 12 months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2015 | Q4 FY2014 | QoQ | Q1 FY2014 | YoY |
|---|---|---|---|---|---|
| Revenue | $592.5M | $586.6M | +1.0% | $570.4M | +3.9% |
| Gross profit | $513.8M | $514.7M | -0.2% | $502.9M | +2.2% |
| Gross margin | 86.7% | 87.7% | -1.0 pp | 88.2% | -1.5 pp |
| Research & development | $170.5M | $162.4M | +5.0% | $150.8M | +13.1% |
| Sales & marketing | $225.4M | $232.3M | -3.0% | $208.8M | +8.0% |
| General & administrative | $73.4M | $62.0M | +18.4% | $61.5M | +19.3% |
| Total operating expenses | $471.6M | $463.0M | +1.9% | $421.5M | +11.9% |
| Operating income (loss) | $42.2M | $51.7M | -18.4% | $81.4M | -48.2% |
| Operating margin | 7.1% | 8.8% | -1.7 pp | 14.3% | -7.1 pp |
| Net income (loss) | $28.3M | $53.9M | -47.5% | $55.6M | -49.1% |
| Net margin | 4.8% | 9.2% | -4.4 pp | 9.8% | -5.0 pp |
| Diluted EPS | $0.12 | $0.23 | -$0.11 | $0.24 | -$0.12 |
Risks
The company is accelerating its move to cloud and flexible license offerings, which is expected to increase ratable revenue and reduce upfront perpetual revenue. In FY2015 Q1, operating income decreased 48.2% to $42.2 million and operating margin decreased to 7.1% from 14.3%, and management expects fiscal 2015 GAAP operating margin of approximately 3% to 5%.
Operating expenses increased 12% and cost of revenue increased 17% in the three months ended April 30, 2014, driven by higher employee-related costs and professional fees, causing income from operations to decrease 48% and operating margin to fall to 7% from 14%. Management expects cost of revenue, marketing and sales, research and development, and general and administrative expenses to increase in absolute dollars and as a percentage of net revenue in Q2 FY2015.
Tech Data Corporation and its global affiliates accounted for 26% of total net revenue for the three months ended April 30, 2014, up from 25% in the prior-year quarter, and approximately 85% of revenue was derived from indirect channel sales through distributors and resellers.
International net revenue represented 71% of total net revenue for the three months ended April 30, 2014, and revenue was negatively impacted by foreign exchange rate changes. On a constant currency basis, net revenue would have increased 5% in the quarter versus reported growth of 3.9%.
The company recently acquired Delcam plc, a supplier of advanced CADCAM and industrial measurement solutions, and regularly pursues acquisitions. Integration risks include assimilating products, operations and personnel, inheriting liabilities, failing to realize revenue and cost projections, and diverting management attention.
Combined revenue from AutoCAD and AutoCAD LT products, excluding suites, represented 32% of total net revenue for the three months ended April 30, 2014, down from 34% in the prior-year period, and flagship product revenue decreased 4% in the quarter. A small number of products drive a substantial portion of net revenue.
A significant portion of revenue is generated through maintenance revenue, and customers have no obligation to attach maintenance to an initial license or renew after the initial term. Subscription revenue increased 12% in the three months ended April 30, 2014, but any decline in attach or renewal rates or in new license sales would negatively impact future maintenance revenue.
Media and Entertainment net revenue decreased 19% in the three months ended April 30, 2014, driven by a 36% decrease in Creative Finishing and a 12% decrease in Animation, reflecting a general decrease in M&E industry end-market demand and the business model transition.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total Subscriptions
Summary, forecast, risks and KPIs are extracted from Autodesk, Inc.'s SEC filings for Q1 FY2015 (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 19, 2026.