Business News

Autodesk Reports 14 Percent Year Over Year Revenue Growth

Friday 19. November 2010 - Strong Growth in Operating Margin, EPS, and Cash Flow from Operating Activities

Autodesk, Inc. (NASDAQ:ADSK) today reported financial results for the third quarter of fiscal 2011.

Revenue was $477 million, an increase of 14 percent compared to the third quarter of fiscal 2010 and 1 percent compared to the second quarter of fiscal 2011.
GAAP operating margin was 15 percent, compared to 6 percent in the third quarter of fiscal 2010 and 17 percent in the second quarter of fiscal 2011.
Non-GAAP operating margin was 21 percent, compared to 18 percent in the third quarter of fiscal 2010 and 25 percent in the second quarter of fiscal 2011. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
GAAP diluted earnings per share were $0.23, compared to GAAP diluted earnings per share of $0.13 in the third quarter of fiscal 2010 and GAAP diluted earnings per share of $0.25 in the second quarter of fiscal 2011.
Non-GAAP diluted earnings per share were $0.32, compared to non-GAAP diluted earnings per share of $0.26 in the third quarter of fiscal 2010, and non-GAAP diluted earnings per share of $0.36 in the second quarter of fiscal 2011.
Cash flow from operating activities was $114 million, an increase of 145 percent compared to the third quarter of fiscal 2010 and 3 percent compared to the second quarter of fiscal 2011.
“We are pleased with our third quarter results, which reflect the solid progress we have achieved over the past year in driving revenue growth and improving profitability,” said Carl Bass, Autodesk president and CEO. “We saw particular strength in our manufacturing business, which experienced strong demand on a global basis. We also delivered double digit year-over-year revenue growth in each of our geographies. Strong revenue coupled with tight cost controls led to a significant year-over-year improvement in profitability. Our relentless attention to building and selling great products allows us to serve our customers well and capitalize on a $14 billion market opportunity.”

“As a result of strong revenue growth and a focus on cost controls, for the year we expect to deliver significant improvement in key financial metrics, including revenue, operating margin, EPS, and cash flow from operating activities,” said Mark Hawkins, Autodesk Executive Vice President, Chief Financial Officer. “Our revenue growth in the third quarter was well balanced with all of our top countries growing year-over-year. Going forward, we are optimistic about our ability to grow revenue and profitability, though we continue to be pragmatic about the pace of the global macroeconomic recovery.”

Operational Overview

EMEA revenue was $183 million and increased 15 percent compared to the third quarter last year as reported and 19 percent on a constant currency basis. EMEA revenue decreased 3 percent sequentially as reported and 7 percent on a constant currency basis.

Revenue in the Americas was $179 million and increased 10 percent compared to the third quarter last year and 7 percent sequentially.

Revenue in Asia Pacific was $115 million and increased 22 percent compared to the third quarter last year as reported and 19 percent on a constant currency basis. Revenue in Asia Pacific decreased 1 percent sequentially as reported and 2 percent on a constant currency basis.

Revenue from emerging economies was $76 million, an increase of 23 percent compared to the third quarter last year as reported and 25 percent on a constant currency basis. Revenue from emerging economies increased 7 percent sequentially as reported and 4 percent on a constant currency basis. Revenue from emerging economies represented 16 percent of total revenue in the third quarter.

All constant currency calculations remove the impact of foreign currency fluctuations and any gains or losses recorded to revenue within the current period as a result of Autodesk’s hedging program.

Revenue from the Platform Solutions and Emerging Business segment was $174 million, an increase of 12 percent compared to the third quarter last year and a decrease of 2 percent sequentially. Revenue from the Architecture, Engineering and Construction business segment was $136 million, an increase of 9 percent compared to the third quarter last year and 3 percent sequentially. Revenue from the Manufacturing business segment was $117 million, an increase of 30 percent compared to the third quarter last year and 4 percent sequentially. Revenue from the Media and Entertainment business segment was $50 million, an increase of 5 percent compared to the third quarter last year and 2 percent sequentially.

Third quarter operating margins increased significantly year-over-year. The 9 percentage point improvement in GAAP operating margin was driven primarily by higher revenue, reduced stock-based compensation expenses, and the absence of restructuring charges in the current quarter. The 3 percentage point year-over-year improvement in non-GAAP operating margin was driven primarily by higher revenue.

Cash flow from operating activities was $114 million, compared to $47 million in the third quarter last year, and $112 million in the second quarter of fiscal 2011. Autodesk’s cash and investments balance at the end of the third quarter was over $1.3 billion.

Business Outlook

The following statements are forward-looking statements that are based on current expectations and assumptions, and involve risks and uncertainties some of which are set forth below.

Full Year Fiscal 2011

Net revenue for fiscal 2011 is expected to increase by 12 to 13 percent compared to fiscal 2010 and be in the range of $1.924 billion and $1.944 billion. GAAP earnings per diluted share are expected to increase more than 230 percent compared to fiscal 2010 and be in the range of $0.83 and $0.86. Non-GAAP earnings per diluted share are expected to increase by 28 to 31 percent and be in the range of $1.27 and $1.30. Non-GAAP earnings per diluted share for fiscal 2011 exclude $0.24 related to stock-based compensation expense, $0.17 for amortization of acquisition related intangibles, and $0.03 related to restructuring charges, net of tax.

Autodesk anticipates GAAP operating margin for fiscal 2011 to increase between 950 and 990 basis points for full year fiscal 2011 compared to fiscal 2010. Non-GAAP operating margin is expected to increase between 430 and 460 basis points for full year fiscal 2011 compared to fiscal 2010. Non-GAAP operating margin excludes stock-based compensation expense, amortization of acquisition related intangibles, and restructuring charges.

Fourth Quarter Fiscal 2011

Net revenue for the fourth quarter of fiscal 2011 is expected to be in the range of $500 million and $520 million. GAAP earnings per diluted share are expected to be in the range of $0.19 and $0.22. Non-GAAP earnings per diluted share are expected to be in the range of $0.30 and $0.33 and exclude $0.06 related to stock-based compensation expense, and $0.05 for the amortization of acquisition related intangibles, net of tax.

Fourth quarter outlook assumes an effective tax rate of 25 percent for GAAP results and 27 percent for non-GAAP results.

Full Year Fiscal 2012

Net revenue for fiscal 2012 is expected to increase by approximately 10 percent compared to fiscal 2011. GAAP operating margin for fiscal 2012 is expected to increase as the company recorded restructuring charges in fiscal 2011 that it does not anticipate recording in fiscal 2012. Autodesk is not able to provide targets for GAAP operating margins at this time because of the difficulty of estimating certain items that are excluded from non-GAAP that affect operating margin, such as charges related to stock-based compensation expense and amortization of acquisition related intangibles. Autodesk anticipates fiscal 2012 non-GAAP operating margin to increase by approximately 200 basis points compared to fiscal 2011. Autodesk is not providing specific EPS guidance for fiscal 2012 at this time.

Non-GAAP operating margin excludes stock-based compensation expense and amortization of acquisition related intangibles.