Summary
Autodesk reported fiscal 2013 second quarter revenue of $568.7 million, up 4.1% from the prior-year quarter. Gross profit was $508.9 million, up 4.1%. Gross margin was 89.5%, flat. Operating income fell 2.2% to $92.9 million. Net income fell 9.3% to $64.6 million. Diluted EPS was $0.28, down $0.02. Operating margin was 16.3%, down 1.1 percentage points. For the six months ended July 31, 2012, revenue was $1,157.3 million, up 7.7%. Gross profit was $1,038.7 million, up 7.9%. Operating income was $186.9 million, up 7.7%. Net income was $143.5 million, up 2.1%. Diluted EPS was $0.62, up $0.03. Gross margin was 89.8%, up 0.2 percentage points. Operating margin was 16.1%, flat. Operating cash flow was $107.1 million for the quarter, down 19.0%, and $246.4 million for the six months, down 5.4%. Capital expenditures were $16.7 million for the quarter, up 0.6%, and $28.2 million for the six months, down 29.1%. Deferred revenue, current portion, was $590.9 million, up 12.5% from the prior-year quarter.
The quarter's growth came from new seat licenses and maintenance. Management said license and other revenue increased 2% and maintenance revenue increased 7%. Suites represented 29% of revenue and increased 5% for the quarter and 18% for the six months. Flagship products were 56% of revenue and increased 3%. New and adjacent products were 15% of revenue and increased 5%. By geography, the Americas grew 4%, EMEA declined 1%, and Asia Pacific grew 12%. By segment, Platform Solutions and Emerging Business grew 10%, Architecture, Engineering and Construction grew 2%, Manufacturing grew 4%, and Media and Entertainment fell 10%. Media and Entertainment was hurt by a 25% drop in Creative Finishing and a 4% drop in Animation. Emerging economies were flat for the quarter and represented 15% of revenue. Tech Data accounted for 23% of total net revenue in the quarter. Management said execution challenges from reorganizing sales teams by industry and an uneven global economy pressured revenue.
For the third quarter of fiscal 2013, management expects cost of revenue to slightly increase in absolute dollars but remain consistent as a percentage of net revenue. Marketing and sales expense is expected to increase in absolute dollars but remain consistent as a percentage of net revenue. Research and development expense is expected to increase in absolute dollars and increase as a percentage of net revenue. General and administrative expense is expected to increase in absolute dollars but remain consistent as a percentage of net revenue. In August 2012, the board approved a worldwide restructuring plan to accelerate the transition to cloud and mobile computing. Autodesk expects a pre-tax charge of $50 million to $60 million, with $40 million to $45 million in the third quarter of fiscal 2013 and most of the remainder in the fourth quarter of fiscal 2013. The company is also cutting spending in the second half of the fiscal year because of a reduced revenue outlook. The restructuring will reduce operating margins and net income for the remainder of fiscal 2013.
Risks remain. Upgrade revenue fell 21% in the quarter and 15% in the six months. Backlog related to current software license product orders decreased by $20.5 million, from $27.1 million at January 31, 2012 to $6.6 million at July 31, 2012. Non-GAAP net income was $111.1 million, and non-GAAP diluted EPS was $0.48. Non-GAAP operating margin was 25%. Autodesk repurchased 3.4 million shares for $111.1 million in the quarter and 5.9 million shares for $210.3 million in the six months. The company also faces foreign exchange swings, distributor concentration, and weak demand in some regions. Management's plan depends on fixing execution issues and completing the restructuring without further disruption.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2013 | Q1 FY2013 | QoQ | Q2 FY2012 | YoY |
|---|---|---|---|---|---|
| Revenue | $568.7M | $588.6M | -3.4% | $546.3M | +4.1% |
| Gross profit | $508.9M | $529.8M | -3.9% | $488.9M | +4.1% |
| Gross margin | 89.5% | 90.0% | -0.5 pp | 89.5% | -0.0 pp |
| Research & development | $144.9M | $152.7M | -5.1% | $139.2M | +4.1% |
| Sales & marketing | $212.4M | $223.2M | -4.8% | $201.0M | +5.7% |
| General & administrative | $58.7M | $59.9M | -2.0% | $55.0M | +6.7% |
| Total operating expenses | $416.0M | $435.8M | -4.5% | $393.9M | +5.6% |
| Operating income (loss) | $92.9M | $94.0M | -1.2% | $95.0M | -2.2% |
| Operating margin | 16.3% | 16.0% | +0.4 pp | 17.4% | -1.1 pp |
| Net income (loss) | $64.6M | $78.9M | -18.1% | $71.2M | -9.3% |
| Net margin | 11.4% | 13.4% | -2.0 pp | 13.0% | -1.7 pp |
| Diluted EPS | $0.28 | $0.34 | -$0.06 | $0.30 | -$0.02 |
Risks
MD&A states execution challenges from internal organizational changes, including reorganizing sales teams by industry, contributed to lower than anticipated revenue for the quarter and a decline in demand across geographic regions. The company commenced a company-wide restructuring plan in the third quarter of fiscal 2013 with anticipated pre-tax charges of $50 million to $60 million, including $40 million to $45 million in the third quarter, which will reduce operating margins and net income for the remainder of fiscal 2013.
Risk factors highlight the continuing sovereign debt crisis and financial market volatility in Europe as indicating a renewed slowdown. MD&A reports EMEA net revenue decreased 1% in the quarter ended July 31, 2012 and emerging economies revenue remained flat, with weak global conditions potentially impacting future financial results.
Tech Data and its global affiliates accounted for 23% and 22% of total net revenue for the three and six months ended July 31, 2012, respectively, up from 17% in both prior-year periods, and its acquisition of MuM further concentrates sales. A significant disruption or deterioration in this relationship could negatively impact revenue.
Operating margin decreased to 16% in the quarter ended July 31, 2012 from 17% in the prior-year quarter, as operating expenses increased 6% while net revenue increased 4%. Risk factors note operating expenses are based in part on expectations for future revenue and are relatively fixed in the short term, so a revenue shortfall could immediately and significantly adversely affect profitability.
The company is investing significantly in cloud, mobile, and social computing and product suites; risk factors state customer adoption may not occur as rapidly as anticipated or competitors may introduce accepted products. MD&A says the third quarter fiscal 2013 restructuring plan is intended to accelerate the transition to cloud and mobile computing.
A significant portion of revenue is generated through maintenance, and customers have no obligation to attach or renew after the initial term. MD&A notes maintenance revenue increased 7% in the quarter and 9% year to date, but any decline in attach or renewal rates or new license sales would negatively impact future revenue.
International net revenue represented 72% of total net revenue for the quarter and six months ended July 31, 2012. Risk factors cite exposure to foreign currency fluctuations, regulatory changes, geopolitical instability, and economic volatility in emerging economies, which could adversely impact financial results even if U.S. results are strong.
Risk factors state the software industry has limited barriers to entry and vigorous competition, and some competitors have greater financial, technical, sales and marketing resources. Failure to adapt to cloud computing, mobile devices, and new computing platforms may adversely affect product sales.
Net revenue for the Media and Entertainment segment decreased 10% in the quarter and 7% year to date, driven by a 25% decrease in Creative Finishing and a 4% decrease in Animation, with weakening demand across all geographic regions.
MD&A reports upgrade revenue decreased 21% in the quarter and 15% year to date, primarily due to upgrade promotions in the first two quarters of fiscal 2012. Risk factors note failure to move customers from prior product versions in connection with product retirement programs could harm results.
The effective tax rate increased to 30% in the quarter and 24% year to date, from 24% and 21% in the prior-year periods, due to a U.S. valuation allowance related to an investment impairment, expiration of the federal research credit, and non-deductible stock-based compensation. Risk factors note tax positions may be challenged by authorities.
Risk factors cite risks from strategic acquisitions and investments, including integration challenges and impairment. MD&A reports a $5.0 million loss on strategic investments in the quarter and $3.9 million year to date, primarily due to impairment of an equity investment.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Deferred Revenue
Net maintenance billings
Summary, forecast, risks and KPIs are extracted from Autodesk, Inc.'s SEC filings for Q2 FY2013 (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.