Summary
Autodesk reported FY2012 Q2 revenue of $546.3 million, up 15.5% from the prior-year quarter. Gross profit rose 15.2% to $488.9 million. Operating income increased 19.0% to $95.0 million. Net income was $71.2 million, up 18.9%. Diluted EPS came in at $0.30, up $0.05 or 20.0%. The quarter's operating margin was 17.4%, up 0.5 percentage points, while gross margin slipped 0.3 percentage points to 89.5%. Year-to-date gross margin was 89.6%, up 0.1 percentage points, and year-to-date operating margin was 16.2%, up 2.4 percentage points.
For the six months ended July 31, 2011, revenue was $1.07 billion, up 13.4% from the prior-year period. Year-to-date gross profit was $962.6 million, up 13.6%. Year-to-date operating income was $173.6 million, up 32.9%. Net income for the year-to-date period was $140.5 million, up 45.1%, and diluted EPS was $0.59, up 43.9%. Operating cash flow for the quarter was $132.2 million, up 18.6% from the prior-year quarter. Year-to-date operating cash flow was $260.6 million, up 4.0%. Capital expenditures were $29.6 million in the quarter, up 458.5%, and $53.0 million year to date, up 377.5%. Deferred revenue at quarter end was $525.3 million, up 15.7% from the prior-year quarter.
Autodesk's suites strategy gained traction. Revenue from suites increased 45% in the quarter and 31% year to date. Suites represented 29% of total net revenue in the quarter and 26% year to date, up from 23% in both prior-year periods. Revenue from emerging countries rose 23% in the quarter and 18% year to date, representing 16% and 15% of total net revenue. Flagship product revenue increased 7% in the quarter and 9% year to date, and represented 56% and 59% of total net revenue. New and adjacent product revenue grew 5% in the quarter and 7% year to date, and was 15% of total net revenue in both periods. International net revenue represented 72% and 73% of total net revenue for the quarter and year to date. Revenue from Japan was approximately 11% of total net revenue for both the quarter and year to date. Total subscription program enrollment was about 3.0 million users at both July 31, 2011 and January 31, 2011. Tech Data accounted for 17% of total net revenue in both the quarter and year to date.
Management expects cost of revenue, marketing and sales, research and development, and general and administrative expenses to increase in absolute dollars but remain relatively consistent as a percentage of net revenue in the third quarter of fiscal 2012 compared with the third quarter of fiscal 2011. The company's primary goals for the remainder of fiscal 2012 are to grow revenue and improve operating margin percentage. On a constant currency basis, net revenue increased 14% in the quarter and 13% year to date. The company changed its constant currency methodology in the quarter to exclude hedging gains and losses from both periods. Risks include weak global economic conditions, the recent U.S. debt downgrade, high unemployment, volatility in financial markets, and uncertainty from the March 2011 earthquakes and tsunami in Japan. Autodesk also faces foreign exchange fluctuations, challenges in emerging markets such as economic volatility, geopolitical risk, local competition, intellectual property protection, poorly developed business infrastructure, scarcity of talent, and software piracy. Acquisitions bring integration challenges and may negatively impact operating margins. The company relies on major distributors, including Tech Data, which accounted for 17% of total net revenue. The company repurchased 2.5 million shares for $100.8 million in the quarter and 4.2 million shares for $169.4 million year to date. It had no borrowings under its $400.0 million line of credit during the quarter. Non-GAAP net income was $103.5 million and non-GAAP diluted EPS was $0.44 for the quarter. Non-GAAP operating margin was 25% for the quarter and 24% year to date.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2012 | Q1 FY2012 | QoQ | Q2 FY2011 | YoY |
|---|---|---|---|---|---|
| Revenue | $546.3M | $528.3M | +3.4% | $472.8M | +15.5% |
| Gross profit | $488.9M | $473.7M | +3.2% | $424.4M | +15.2% |
| Gross margin | 89.5% | 89.7% | -0.2 pp | 89.8% | -0.3 pp |
| Research & development | $139.2M | $136.6M | +1.9% | $119.3M | +16.7% |
| Sales & marketing | $201.0M | $201.9M | -0.4% | $177.5M | +13.2% |
| General & administrative | $55.0M | $56.6M | -2.8% | $45.9M | +19.8% |
| Total operating expenses | $393.9M | $395.1M | -0.3% | $344.6M | +14.3% |
| Operating income (loss) | $95.0M | $78.6M | +20.9% | $79.8M | +19.0% |
| Operating margin | 17.4% | 14.9% | +2.5 pp | 16.9% | +0.5 pp |
| Net income (loss) | $71.2M | $69.3M | +2.7% | $59.9M | +18.9% |
| Net margin | 13.0% | 13.1% | -0.1 pp | 12.7% | +0.4 pp |
| Diluted EPS | $0.30 | $0.29 | +$0.01 | $0.25 | +$0.05 |
Risks
The current global economic uncertainty may cause customers to defer, reduce or cancel purchases. MD&A also cites the recent U.S. debt downgrade and weak global economic conditions as potential impacts on future financial results.
International net revenue represented 72% and 73% of total net revenue for the three and six months ended July 31, 2011, respectively, as compared to 71% and 72% in prior-year periods. Emerging economies represented 16% and 15% of total net revenue for those periods, and Japan was approximately 11%.
Tech Data Corporation and affiliates accounted for 17% of total net revenue for both the three and six months ended July 31, 2011, up from 15% and 16% in the prior-year periods. Loss or financial instability of this distributor could harm revenue and cash collection.
A significant portion of revenue is generated through maintenance, and customers have no obligation to attach or renew after the initial term. Total subscription program enrollment was about 3.0 million users at both July 31, 2011 and January 31, 2011, so a decline in attach or renewal rates or new license sales would negatively impact future maintenance revenue.
Combined revenue from AutoCAD and AutoCAD LT products represented 31% and 34% of total net revenue for the three and six months ended July 31, 2011, respectively. Any factor adversely affecting sales of these products would likely harm financial results.
A critical part of growth strategy is migrating customers from standalone products to suites. If sales of AutoCAD, AutoCAD LT, or standalone flagship products decrease without a corresponding increase in suites revenue or seat purchases, results of operations will be adversely affected. Suites revenue increased 45% and 31% and represented 29% and 26% of total net revenue for the three and six months ended July 31, 2011.
The software industry has limited barriers to entry, vigorous competition, and rapid technological changes including cloud computing, mobile devices, and new computing platforms. Failure to adapt could reduce net revenue and profit margins.
Autodesk has increased the number, pace, and dollars spent on acquisitions compared to fiscal 2011. Integration challenges, inability to realize anticipated revenue and cost projections, and diversion of management time could negatively impact results.
A substantial portion of business is outside the U.S., and foreign currency fluctuations could materially impact financial results and cash flows. MD&A notes revenue benefited from foreign exchange rate changes, and constant currency revenue growth was 14% and 13% for the three and six months ended July 31, 2011, lower than reported growth.
Changes in tax laws, including possible U.S. tax law changes on foreign subsidiary earnings, and challenges to tax positions could significantly impact the effective tax rate. MD&A notes future effective tax rate may be adversely affected if earnings are lower in lower-tax jurisdictions or if foreign earnings are repatriated.
The number and frequency of inquiries from U.S. and foreign regulatory agencies have increased in recent years, and litigation activity has increased as the global economy has changed. Significant disputes or formal regulatory actions could result in costly defense, damage awards, injunctive relief, fines, or changes to business practices.
The March 2011 earthquakes and tsunami in Japan created uncertainty for future financial results, and Japan represented approximately 11% of total net revenue for the three and six months ended July 31, 2011. Catastrophic events could disrupt operations or reduce regional demand.
Operating expenses are based in part on expectations for future revenue and are relatively fixed in the short term. Any revenue shortfall below expectations could have an immediate and significant adverse effect on profitability.
Financial results fluctuate within each quarter and from quarter to quarter, and interim periods in certain regions are affected by seasonality. Europe is usually affected by a slow summer period in the third quarter, and Asia Pacific typically experiences seasonal slowing in the third and fourth quarters.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Aggregate backlog
Net maintenance billings
Total Subscription Program Enrollment
Summary, forecast, risks and KPIs are extracted from Autodesk, Inc.'s SEC filings for Q2 FY2012 (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.