New Model Subscription Additions Underscore Continued Progress on Business Model Transition

(PRNewswire) —   Autodesk, Inc. (NASDAQ: ADSK) today reported financial results for the fourth quarter and full fiscal year ended January 31, 2017.

Fourth Quarter Fiscal 2017

• New model subscriptions increased 227,000 from the third quarter of fiscal 2017 to 1.09 million.
• Total subscriptions increased by 154,000 from the third quarter of fiscal 2017 to 3.11 million at the end of the fourth quarter.
• New model annualized recurring revenue (ARR) was $529 million and increased 107 percent compared to the fourth quarter last year as reported and 109 percent on a constant currency basis.
• Total ARR was $1.60 billion, an increase of 16 percent compared to the fourth quarter last year as reported and 19 percent on a constant currency basis.
• Deferred revenue increased 18 percent to $1.79 billion, compared to $1.52 billion in the fourth quarter last year.
• Revenue was $479 million, a decrease of 26 percent compared to the fourth quarter last year as reported and 25 percent on a constant currency basis. During Autodesk's business model transition, revenue is negatively impacted as more revenue is recognized ratably rather than up front and as new offerings generally have a lower initial purchase price.
• Total GAAP spend (cost of revenue plus operating expenses) was $646 million, a decrease of 2 percent compared to the fourth quarter last year.  GAAP spend includes a charge of $9 million for a previously announced restructuring and other facility exit costs.
• Total non-GAAP spend was $560 million, a decrease of 4 percent compared to the fourth quarter last year.  A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
• GAAP diluted net loss per share was $(0.77). GAAP diluted net loss per share was $(0.17) in the fourth quarter last year.
• Non-GAAP diluted net loss per share was $(0.28), compared to $0.21 in the fourth quarter last year.

"Autodesk's market-leading products are revolutionizing how customers design, engineer and make anything," said Amar Hanspal, Autodesk co-CEO and chief product officer.  "We finished the fiscal year on a high note with triple-digit year-over-year growth in new model subscriptions and new model ARR, which demonstrates our customers' readiness to adopt our new offerings.  We're particularly pleased with the success of cloud subscriptions where our best-in-class BIM 360 and Fusion offerings drove more than a 150 percent increase year-over-year and represent Autodesk's increasing footprint in construction and manufacturing."

"We made exceptional progress on our business model transition in fiscal 2017 as we successfully navigated the move to subscription-only sales," said Andrew Anagnost, Autodesk co-CEO and chief marketing officer.  "We're well positioned for the next phase of the transition where we'll offer our maintenance customers an easy and cost effective path to move to product subscription."

"Record new model subscription additions and continued cost control contributed to our strong fourth quarter results," said Scott Herren, Autodesk chief financial officer.  "We have invested in critical areas to fuel the transition and the long-term health of our business, while simultaneously reducing non-GAAP spend by three percent for the fiscal year.  We're starting fiscal 2018 from a position of strength, which gives us added confidence in our ability to achieve our long-term targets and drive long-term value creation for Autodesk shareholders."

Fourth Quarter Operational Overview

New model subscriptions (product, enterprise flexible license, and cloud subscription) were 1.09 million, a net increase of 227,000 from the third quarter of fiscal 2017. The increase in new model subscriptions was led by product subscriptions.  Maintenance subscriptions were 2.02 million, a net decrease of 73,000 from the third quarter of fiscal 2017.  Total subscriptions were 3.11 million, a net increase of 154,000 from the third quarter of fiscal 2017. 

New model ARR was $529 million and increased 107 percent compared to the fourth quarter last year as reported and 109 percent on a constant currency basis.  Maintenance ARR was $1.07 billion and decreased 4 percent compared to the fourth quarter last year as reported and 2 percent on a constant currency basis.  Total ARR for the fourth quarter increased 16 percent to $1.60 billion compared to the fourth quarter last year as reported and 19 percent on a constant currency basis.  Similar to last quarter, fourth quarter total ARR growth was impacted by the allocation of existing marketing development funds (MDF).  MDF is recorded as contra revenue and historically was predominantly allocated against license revenue.  With the end of sale of perpetual licenses, MDF is now allocated against recurring revenue, negatively impacting new model ARR growth by 6 percentage points, maintenance ARR growth by 2 percentage points, and total ARR growth by 3 percentage points.

Total recurring revenue in the fourth quarter was 84 percent of total revenue compared to 53 percent in the fourth quarter last year.

As a reminder, during the business model transition, revenue is negatively impacted as more revenue is recognized ratably rather than up front and as new product offerings generally have a lower initial purchase price.  As part of the business model transition, Autodesk discontinued new perpetual license sales for most individual products at the end of the fourth quarter of fiscal 2016 and for suites at the end of the second quarter of fiscal 2017.

Revenue in the Americas was $211 million, a decrease of 18 percent compared to the fourth quarter last year.  EMEA revenue was $186 million, a decrease of 22 percent compared to the fourth quarter last year as reported and 18 percent on a constant currency basis. Revenue in APAC was $82 million, a decrease of 46 percent compared to the fourth quarter last year as reported and 47 percent on a constant currency basis.

Financial Highlights for Fiscal 2017*

• Net subscription additions of 530,000.  Total subscriptions increased 21 percent to 3.11 million.
• New model subscriptions increased 155 percent to 1.09 million.
• New model ARR increased 107 percent as reported and 109 percent on a constant currency basis.
• Total ARR increased 16 percent as reported and 19 percent on a constant currency basis.
• Total GAAP spend increased 1 percent.  Total non-GAAP spend decreased 3 percent.
• Total deferred revenue increased 18 percent to $1.79 billion.

*All numbers are compared to fiscal 2016.

Business Outlook

The following are forward-looking statements based on current expectations and assumptions, and involve risks and uncertainties some of which are set forth below under "Safe Harbor Statement."  Autodesk's business outlook for the first quarter and full year fiscal 2018 assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment.  A reconciliation between the GAAP and non-GAAP estimates is provided below or in the tables following this press release.

First Quarter Fiscal 2018