Summary
Autodesk closed the second quarter of fiscal 2021 with $913.1 million in revenue, up 14.6 percent from the prior-year quarter, and $1.80 billion for the six months ended July 31, 2020, up 17.4 percent year to date. Subscription plan revenue rose 27 percent while maintenance plan revenue fell 51 percent as customers keep moving through the maintenance-to-subscription program. Recurring revenue was 98 percent of total revenue, up from 96 percent a year earlier. Gross profit rose 16.0 percent to $832.2 million, and GAAP gross margin reached 91.1 percent, up 1.1 percentage points.
Profitability improved far more than the top line. GAAP operating income was $146.1 million, up 98.0 percent, and GAAP operating margin hit 16.0 percent, up 6.7 percentage points from the prior-year quarter. Non-GAAP operating income was $262.4 million at a 29 percent non-GAAP operating margin, up 5 percentage points. GAAP net income was $98.2 million, up 144.3 percent, and GAAP diluted EPS was $0.44, up $0.26. Non-GAAP diluted EPS was $0.98 versus $0.65 in the prior-year quarter. The distance between the two EPS figures comes mostly from stock-based compensation and from losses on strategic investments that the non-GAAP numbers exclude.
Cash was the soft spot. Operating cash flow was $91.2 million for the quarter, down $128.1 million, or 58.4 percent, from the prior-year quarter, even as capital expenditures climbed 81.1 percent to $26.8 million. Free cash flow, which the company defines as operating cash flow minus capital expenditures, was $64 million, a decrease of $140 million. For the six months ended July 31, 2020, operating cash flow was $418.5 million, down 5.0 percent from the prior-year period. Billings fell 12 percent to $787 million. Backlog held up better. Current deferred revenue rose 18.6 percent to $2.10 billion, and remaining performance obligations rose 19.2 percent to $3.35 billion versus the prior-year quarter. Unbilled deferred revenue was $469 million, a decrease of $95 million compared with the second quarter of last year.
Guidance points to a slower second half. For the third quarter of fiscal 2021, management guided non-GAAP EPS to $0.91 to $0.97. Full-year fiscal 2021 guidance calls for billings of $4,070 million to $4,170 million, a decline of 3.0 percent to 0.5 percent, a non-GAAP operating margin of 27.5 percent to 29.0 percent, non-GAAP EPS of $3.72 to $3.90, and free cash flow of $1,300 million to $1,400 million. The billings guide is the tell. Subscription revenue is growing fast, but the mix of multi-year contracts and the timing of larger renewals keeps reported billings under pressure even as the recurring base expands.
Operational details carry risks. Renewal rates improved steadily through the quarter, but new business declined in the mid-teens percent range, and net revenue retention came in within the 100 percent to 110 percent range, down from the 110 percent to 120 percent range a year earlier. By product family, AEC revenue rose 19 percent, AutoCAD and AutoCAD LT rose 18 percent, MFG rose 6 percent, and M&E rose 5 percent. The U.S. grew 16 percent, EMEA grew 12 percent, and APAC grew 21 percent. Autodesk plans to retire maintenance plan offerings on May 7, 2021, so that revenue line keeps shrinking. Distribution concentration is another exposure, with Tech Data accounting for 37 percent of total net revenue in the quarter. Management also points to the duration of the COVID-19 pandemic, the pace of larger multi-year contracts, foreign currency swings that weighed on reported revenue, and a continued valuation allowance against U.S. deferred tax assets.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $913.1M | $885.7M | +3.1% | $796.8M | +14.6% |
| Gross profit | $832.2M | $803.8M | +3.5% | $717.3M | +16.0% |
| Gross margin | 91.1% | 90.8% | +0.4 pp | 90.0% | +1.1 pp |
| Research & development | $232.5M | $217.4M | +6.9% | $215.4M | +7.9% |
| Sales & marketing | $350.9M | $341.3M | +2.8% | $316.8M | +10.8% |
| General & administrative | $93.2M | $104.8M | -11.1% | $101.4M | -8.1% |
| Total operating expenses | $686.1M | $673.2M | +1.9% | $643.5M | +6.6% |
| Operating income (loss) | $146.1M | $130.6M | +11.9% | $73.8M | +98.0% |
| Operating margin | 16.0% | 14.8% | +1.3 pp | 9.3% | +6.7 pp |
| Net income (loss) | $98.2M | $66.5M | +47.7% | $40.2M | +144.3% |
| Net margin | 10.8% | 7.5% | +3.2 pp | 5.0% | +5.7 pp |
| Diluted EPS | $0.44 | $0.30 | +$0.14 | $0.18 | +$0.26 |
Risks
COVID-19 continues to create uncertainty, and the company took customer-support actions during the six months ended July 31, 2020, including extending payment terms to 60 days through August 7, 2020, offering free commercial use of cloud collaboration products through June 2020, and deferring a 20% maintenance price increase. Management stated the full duration and economic recovery timing remain uncertain and not within its control.
New business declined in the range of mid-teens percent during the second quarter ended July 31, 2020, and net revenue retention rate (NR3) fell to the 100% to 110% range as of July 31, 2020 from the 110% to 120% range as of July 31, 2019. Renewal rates, new business close rates and rate of multi-year contracts are cited as COVID-sensitive and the historic effects may not appear until future periods under the subscription model.
Tech Data accounted for 37% and 38% of total net revenue for the three and six months ended July 31, 2020, respectively, and Ingram Micro accounted for 10% for both periods; approximately 70% of revenue was derived from indirect channel sales. Apollo's acquisition of Tech Data closed on June 30, 2020, and reseller and end user uncertainty from that deal could temporarily reduce the company's ability to sell.
In fiscal 2021 the company is transitioning multi-subscription plans to named-user plans and delayed the transition from multi-user licenses to named-user licenses from May 2020 to August 2020 to minimize customer disruption. It is uncertain whether these product and pricing changes will be successful, and they require considerable technical and financial investment.
Deferred revenue was $2.88 billion at July 31, 2020, a decrease of 4% compared to the fourth quarter in the prior fiscal year, and RPO was $3.35 billion, a decrease of 6% compared to the fourth quarter in the prior fiscal year, with current RPO down 2%. These sequential declines could pressure future recognized revenue.
Operating cash flow was $418.5 million for the six months ended July 31, 2020, down 5.0% versus $440.5 million in the prior-year period, and the quarter ended July 31, 2020 was down 58.4% versus the prior-year quarter. COVID-related payment term extensions and free product offers are cited as affecting cash flow.
International net revenue represented 66% of net revenue for both the six months ended July 31, 2020 and 2019, exposing results to Brexit transition uncertainty (transition period ending December 31, 2020), rising protectionism and tariffs, and faster or slower COVID recovery across geographies. Constant currency net revenue growth exceeded reported growth, indicating a negative foreign exchange impact.
The company has $1.6 billion of debt maturing from December 2022 to January 2030 plus a $650.0 million revolving facility with a covenant package. A covenant breach could block additional borrowings or accelerate outstanding debt, and credit rating downgrades could raise borrowing costs.
Combined revenue from the AutoCAD and AutoCAD LT family products represented 30% and 29% of total net revenue for the six months ended July 31, 2020 and 2019, respectively, and the growth strategy depends on these customers expanding into other offerings and cloud functionality. If they do not, results of operations would be adversely affected.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Remaining Performance Obligations (RPO)
Free Cash Flow
Deferred Revenue
Current RPO
Unbilled Deferred Revenue
Recurring Revenue as % of Net Revenue
Net Revenue Retention (NR3)
Summary, forecast, risks and KPIs are extracted from Autodesk, Inc.'s SEC filings for Q2 FY2021 (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 2, 2026.