Summary
Autodesk reported fiscal 2012 third quarter revenue of $548.6 million, up 15.1% from the prior-year quarter. Year-to-date revenue reached $1.62 billion, up 14.0%. Gross profit was $489.0 million in the quarter, up 14.2%, while operating income rose 30.3% to $90.2 million. Net income increased 35.8% to $72.8 million, and diluted EPS was $0.32, up 39.1%. The operating margin improved to 16.4%, up 1.9 percentage points, even as gross margin slipped to 89.1%, down 0.7 percentage points. Operating cash flow for the quarter was $137.7 million, up 20.5%, and capital expenditures were $35.8 million, up 411.4%. Deferred revenue, current portion, was $499.9 million, up 16.3%.
The quarter's growth came from broad product and geographic demand. License and other revenue increased 18%, and maintenance revenue rose 12%. Commercial new seat license revenue increased 11%, and upgrade revenue rose 17%. Suites revenue grew 36% and represented 27% of total net revenue, up from 23% in the prior-year quarter. Flagship products were 57% of revenue and grew 8%. New and adjacent products were 16% of revenue and grew 11%. By geography, Americas revenue rose 12%, EMEA rose 10%, and APAC rose 28%. Emerging economies revenue increased 15% and made up 16% of total revenue. Segment performance was led by Platform Solutions and Emerging Business, up 21%, followed by Manufacturing at 14%, Architecture, Engineering and Construction at 12%, and Media and Entertainment at 6%.
Management's outlook for the fourth quarter of fiscal 2012 calls for cost of revenue to increase in absolute dollars but remain relatively consistent as a percentage of net revenue. Marketing and sales expense is expected to slightly increase in absolute dollars but decrease 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 relatively consistent as a percentage of net revenue. For the remainder of fiscal 2012, the primary goals are to grow revenue and improve operating margin percentage.
Cash generation and capital returns remained active. Net maintenance billings increased 18% during the quarter. Total subscription program enrollment was about 3.1 million users at October 31, 2011, compared with 2.9 million users at January 31, 2011. Days sales outstanding in trade receivables was 43 at October 31, 2011, compared with 55 days at January 31, 2011. The company repurchased 3.5 million shares for $94.3 million in the quarter and 7.7 million shares for $263.7 million in the nine months. It also had a $400.0 million line of credit with no amounts outstanding.
Risks remain substantial. Autodesk depends on major distributors, and Tech Data accounted for 16% of total net revenue in the quarter. After Tech Data purchased certain assets of Mensch und Maschine Software, the combined entity would have accounted for 20% of revenue for the quarter if the acquisition had occurred on February 1, 2011. International revenue represented 71% of total net revenue in the quarter, and Japan alone was 12%. The company faces weak global economic conditions, the U.S. debt downgrade, high unemployment, and volatility in financial markets. Foreign currency changes affect revenue and spending, and the pace of recovery from the March 2011 disasters in Japan creates uncertainty. Acquisitions bring integration challenges and can pressure operating margins. The company also notes risks from economic volatility, geopolitical risk, local competition, intellectual property protection, poorly developed business infrastructure, scarcity of talent, and software piracy in emerging markets.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2012 | Q2 FY2012 | QoQ | Q3 FY2011 | YoY |
|---|---|---|---|---|---|
| Revenue | $548.6M | $546.3M | +0.4% | $476.7M | +15.1% |
| Gross profit | $489.0M | $488.9M | +0.0% | $428.2M | +14.2% |
| Gross margin | 89.1% | 89.5% | -0.3 pp | 89.8% | -0.7 pp |
| Research & development | $141.2M | $139.2M | +1.4% | $122.8M | +15.0% |
| Sales & marketing | $206.2M | $201.0M | +2.6% | $185.1M | +11.4% |
| General & administrative | $51.4M | $55.0M | -6.5% | $51.1M | +0.6% |
| Total operating expenses | $398.8M | $393.9M | +1.2% | $359.0M | +11.1% |
| Operating income (loss) | $90.2M | $95.0M | -5.1% | $69.2M | +30.3% |
| Operating margin | 16.4% | 17.4% | -0.9 pp | 14.5% | +1.9 pp |
| Net income (loss) | $72.8M | $71.2M | +2.2% | $53.6M | +35.8% |
| Net margin | 13.3% | 13.0% | +0.2 pp | 11.2% | +2.0 pp |
| Diluted EPS | $0.32 | $0.30 | +$0.02 | $0.23 | +$0.09 |
Risks
Current global economic uncertainty, sovereign debt issues, high unemployment and tighter credit may reduce customer spending and government-funded demand. MD&A states that if global economic conditions deteriorate, Autodesk may not achieve its financial goals.
Tech Data and its global affiliates accounted for 16% of total net revenue for the three and nine months ended October 31, 2011. After Tech Data purchased certain assets of MuM on October 27, 2011, the combined business would have accounted for 20% and 22% of revenue for those periods if the acquisition had occurred on February 1, 2011.
A significant portion of revenue is generated through maintenance, and customers have no obligation to attach or renew maintenance after the initial term. MD&A notes maintenance revenue increased 12% for the three months ended October 31, 2011, but any decline in attach or renewal rates or new license sales would reduce future maintenance revenue.
International net revenue represented 71% and 72% of total net revenue for the three and nine months ended October 31, 2011, exposing Autodesk to currency, regulatory, tax, geopolitical and collection risks. MD&A notes revenue benefited from foreign exchange rate changes, with constant currency growth lower at 12% and 13% for those periods.
Growth strategy depends on migrating customers from standalone AutoCAD and AutoCAD LT products to suites. If standalone product license sales decrease without a corresponding increase in suites revenue, results of operations will be adversely affected. MD&A reports suites revenue increased 36% and 33% and represented 27% of total net revenue for the three and nine months ended October 31, 2011.
The software industry has limited barriers to entry and rapid technological change, including cloud computing, mobile devices and new computing platforms. Competitors with greater resources may reduce net revenue and profit margins or cause loss of market share.
Autodesk has increased the number, pace and dollars spent on acquisitions compared to fiscal 2011, which exacerbates integration, internal control, customer retention and management diversion risks. Acquisitions may also cause quarterly fluctuations from transaction costs or write-offs.
A substantial portion of business is outside the U.S., and foreign currency fluctuations can materially affect financial results and cash flows. MD&A states revenue benefited from foreign exchange rate changes in the three and nine months ended October 31, 2011, and hedging may not be successful.
Autodesk is subject to legal proceedings and regulatory inquiries, with increased litigation activity and more inquiries from U.S. and foreign agencies in recent years. Unfavorable outcomes could result in defense costs, damage awards, injunctive relief or changes to business practices.
As a U.S.-based multinational, Autodesk's effective tax rate depends on geographic mix, transfer pricing and tax rules. Tax positions may be challenged by authorities, and possible U.S. tax law changes could significantly impact how foreign subsidiary earnings are taxed.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Deferred Revenue
Net maintenance billings
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from Autodesk, Inc.'s SEC filings for Q3 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.