Summary
Autodesk reported third-quarter fiscal 2011 revenue of $476.7 million, up 14.3% from the prior-year quarter. Gross profit rose 15.1% to $428.2 million. Operating income climbed 163.1% to $69.2 million. Net income increased 81.7% to $53.6 million. Diluted EPS rose 76.9% to $0.23. Gross margin was 89.8%, up 0.6 percentage points. Operating margin was 14.5%, up 8.2 percentage points. The company said demand improved in all geographies and industries it serves.
For the nine-month period, revenue was $1.42 billion, up 13.2%. Gross profit was $1,275.9 million, up 14.9%. Operating income was $199.8 million, up 2003.2%. Net income was $150.4 million, up 1803.8%. Diluted EPS was $0.64, up 2033.3%. Gross margin was 89.6%, up 1.3 percentage points. Operating margin was 14.0%, up 13.3 percentage points.
Model-based design product revenue increased 17% in the quarter and 15% in the nine-month period, and represented 30% of total revenue in both periods. Suites revenue increased 24% in the quarter and 26% in the nine-month period, and represented 22% of total revenue in both periods. Revenue from emerging economies increased 23% in the quarter and 17% in the nine-month period, and represented 16% and 15% of net revenue, respectively. Commercial new seat revenue increased 33% in the quarter. Subscription program enrollment reached about 2.8 million users at October 31, 2010, up from 2.2 million at January 31, 2010. Aggregate backlog was $523.3 million at October 31, 2010, down from $542.5 million at January 31, 2010.
Operating cash flow was $114.3 million in the quarter, up 144.8%. Year-to-date operating cash flow was $364.9 million, up 201.1%. Capital expenditures were $7.0 million in the quarter, up 18.6%, and $18.1 million year to date, down 40.1%. Deferred revenue, current portion, was $430.0 million, up 7.2%. Cash and marketable securities totaled $1,336.6 million at October 31, 2010. The company repurchased 2.5 million shares for $74.9 million in the quarter and 7.0 million shares for $204.1 million in the nine-month period.
Management's guidance for the fourth quarter of fiscal 2011 calls for cost of revenue to increase in absolute dollars compared with the fourth quarter of fiscal 2010 and to remain relatively flat as a percentage of net revenue. Marketing and sales, research and development, and general and administrative expenses are each expected to remain relatively flat as a percentage of net revenue and to increase in absolute dollars due to performance-based compensation. For the full fiscal year 2011, the primary financial goals are to grow revenue and improve operating margin percentage. The restructuring plan initiated in the first quarter of fiscal 2011 is expected to result in charges of approximately $10.0 million to $12.0 million during fiscal 2011. Risks include high unemployment in several important geographies, uncertainty about credit availability, foreign exchange fluctuations, and the concentration of international revenue, which represented 70% of net revenue in the quarter. Tech Data accounted for 15% of consolidated net revenue in the quarter. Emerging economy markets carry economic volatility, geopolitical risk, intellectual property protection, and software piracy challenges. The company also notes that if revenue declines or does not grow as rapidly as planned, it may further reduce operating expenses, including through additional restructuring.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2011 | Q2 FY2011 | QoQ | Q3 FY2010 | YoY |
|---|---|---|---|---|---|
| Revenue | $476.7M | $472.8M | +0.8% | $414.9M | +14.9% |
| Gross profit | $428.2M | $424.4M | +0.9% | $364.8M | +17.4% |
| Gross margin | 89.8% | 89.8% | +0.1 pp | 87.9% | +1.9 pp |
| Research & development | $122.8M | $119.3M | +2.9% | $109.8M | +11.8% |
| Sales & marketing | $185.1M | $177.5M | +4.3% | $176.4M | +4.9% |
| General & administrative | $51.1M | $45.9M | +11.3% | $49.5M | +3.2% |
| Total operating expenses | $359.0M | $344.6M | +4.2% | $362.1M | -0.9% |
| Operating income (loss) | $69.2M | $79.8M | -13.3% | $2.7M | +2463.0% |
| Operating margin | 14.5% | 16.9% | -2.4 pp | 0.7% | +13.9 pp |
| Net income (loss) | $53.6M | $59.9M | -10.5% | $10.5M | +410.5% |
| Net margin | 11.2% | 12.7% | -1.4 pp | 2.5% | +8.7 pp |
| Diluted EPS | $0.23 | $0.25 | -$0.02 | $0.05 | +$0.18 |
Risks
MD&A says global demand improved and revenue rose 14.3% in FY2011 Q3, but it also notes unemployment remains high in important geographies including the U.S. and that credit availability is mixed. A deceleration or reversal of domestic and global recoveries could cause customers to defer, reduce or cancel purchases.
Maintenance revenue is a significant portion of total revenue, and customers have no obligation to attach or renew maintenance contracts. MD&A warns that 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 85% of revenue for the three and nine months ended October 31, 2010 came from indirect channel sales. Tech Data accounted for 15% and 16% of consolidated net revenue for the three and nine months ended October 31, 2010, respectively, up from 14% and 13% in the prior-year periods, increasing exposure if a major distributor becomes insolvent or reduces purchases.
Combined revenue from AutoCAD and AutoCAD LT represented 33% and 34% of consolidated net revenue for the three and nine months ended October 31, 2010, respectively. Any factor adversely affecting sales of these products, including release cycles, competition or market acceptance, would likely harm financial results.
International net revenue represented 70% and 71% of net revenue for the three and nine months ended October 31, 2010, respectively, and emerging economies represented 16% and 15%. MD&A highlights growth in emerging economies but also cites economic volatility, geopolitical risk, intellectual property protection and software piracy as challenges.
MD&A states revenue was negatively impacted by foreign exchange rate changes in FY2011 Q3, while net revenue benefited from foreign exchange rate changes year to date. Foreign currency losses also reduced interest and other income, net during the three and nine months ended October 31, 2010.
Risk factors state financial results fluctuate within each quarter and from quarter to quarter, with Europe usually affected by a slow summer period in the third quarter and Asia Pacific typically experiencing seasonal slowing in the third and fourth quarters. MD&A also notes maintenance billings seasonality drives deferred revenue increases in the first and fourth quarters and declines in the second and third quarters.
A critical part of growth strategy is migrating AutoCAD and AutoCAD LT customers to vertical design, model-based design and Suites offerings. MD&A reports Suites revenue increased 24% in FY2011 Q3 and 26% year to date, and model-based design revenue increased 17% and 15%, but failure to expand customer portfolios could adversely affect results if standalone product sales decrease.
Risk factors state litigation activity has increased as the global economy changed and the business evolved, and the number and frequency of inquiries from U.S. and foreign regulatory agencies have increased in recent years. Any significant dispute or formal regulatory action could result in costly defense, damage awards, injunctive relief, fines or changes to business practices.
MD&A notes future effective tax rate may be materially impacted by foreign earnings taxed at different rates, research credits, state income taxes, stock-based compensation, uncertain tax positions and changes in tax law. California legislation enacted in fiscal 2010 is expected to reduce income subject to California tax in fiscal 2012 and beyond.
MD&A notes the investment portfolio is subject to interest rate trends and market volatility that can reduce interest income or cause impairment. The company holds an investment in The Reserve International Liquidity Fund, which ceased redemptions in the third quarter of fiscal 2009.
MD&A states no goodwill impairment was recorded in FY2011 Q3 or year to date, but if revenue and cash flow projections decline significantly, additional impairment charges may be recorded. A hypothetical 10% decrease in fair value of the PSEB, MFG, AEC or M&E reporting units would not have an impact on carrying value as of October 31, 2010.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Deferred Revenue
Aggregate backlog
Net maintenance billings
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from Autodesk, Inc.'s SEC filings for Q3 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.