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 third quarter and full year fiscal 2019 assumes, among other things, a continuation of the current economic environment and foreign exchange currency rate environment. A reconciliation between the fiscal 2019 GAAP and non-GAAP estimates is provided below or in the tables following this press release.
Starting the first quarter of fiscal 2019, Autodesk reports its results under two new accounting standards. Revenue is now reported under Accounting Standard Codification ("ASC") 606 and sales commissions are now reported under ASC 340-40. We did not recast historical information as we elected to use the modified retrospective transition method. These new standards did not result in a change in timing or amount of revenue recognized for the majority of our maintenance and subscription offerings, though there may be immaterial shifts in the timing of revenue recognition due to the elimination of VSOE requirements and other differences between the standards. However, we are required to capitalize and amortize sales commissions under the new standards. ASC 606 and ASC 340-40 do not affect cash flows or subscriptions.
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Third Quarter Fiscal 2019 | |
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Q3 FY19 Guidance Metrics |
Q3 FY19 under ASC 606
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Revenue (in millions) |
$635 - $645
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EPS GAAP |
$(0.09) - $(0.05) |
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EPS non-GAAP (1) |
$0.24 - $0.28 |
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_______________ | |
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(1) |
Non-GAAP earnings per diluted share excludes $0.27 related to stock-based compensation expense, $0.03 for the amortization of acquisition-related intangibles, $0.01 related to restructuring and other exit costs, $0.01 for acquisition related costs, and $0.01 related to GAAP-only tax charges. |
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FULL YEAR FISCAL 2019 | |
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FY19 Guidance Metrics |
FY19 under ASC 606
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Billings (in millions) |
$2,580 - $2,640 (2)
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Revenue (in millions) |
$2,485 - $2,505 (3)
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GAAP spend growth (cost of revenue plus operating expenses) |
(2.5)% - (1.5)% |
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Non-GAAP spend growth (cost of revenue plus operating expenses) (4) |
1 - 2% |
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EPS GAAP |
$(0.59) - $(0.51) |
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EPS non-GAAP (5) |
$0.87 - $0.95 |
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Net subscription additions |
500k - 550k |
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Total ARR growth |
28% - 30% |
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_______________ | |
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(1) |
The move to the new revenue standard results in an immaterial change to revenue and ARR and a $0.03 reduction to EPS, compared to what would have been recognized under ASC 605. |
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(2) |
Billings guidance reflects the initial impact of approximately $160 million for the adoption of ASC 606. This adjustment does not impact cash flow. |
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(3) |
Excluding the impact of foreign currency exchange rates and hedge gains/losses, revenue guidance would be $2,450 - $2,470 million. |
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(4) |
Non-GAAP spend excludes $231 million related to stock-based compensation expense, $44 million related to restructuring and other facility exit costs, $30 million for the amortization of acquisition-related intangibles, and $6M for acquisition related costs. |
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(5) |
Non-GAAP earnings per diluted share excludes $1.05 related to stock-based compensation expense, $0.17 related to restructuring charges & other exit costs, $0.14 for the amortization of acquisition-related intangibles, $0.10 of GAAP-only tax charges, $0.03 for acquisition related costs and, ($0.03) related to gains on strategic investments and dispositions. |
The third quarter and full year fiscal 2019 outlook assume a projected annual effective tax rate of (117) percent and 19 percent for GAAP and non-GAAP results, respectively. Assumptions for the annual effective tax rate are regularly evaluated and may change based on the projected geographic mix of earnings. At this stage of the business model transition, small shifts in geographic profitability significantly impact the annual effective tax rate.
Earnings Conference Call and Webcast
Autodesk will host its second quarter conference call today at 5:00 p.m. ET. The live broadcast can be accessed at http://www.autodesk.com/investor. Supplemental financial information and prepared remarks for the conference call will be posted to the investor relations section of Autodesk's website simultaneously with this press release.
A replay of the broadcast will be available at 7:00 p.m. ET at http://www.autodesk.com/investor. This replay will be maintained on Autodesk's website for at least 12 months.
Glossary of Terms
Annualized Recurring Revenue (ARR): Represents the annualized value of our average monthly recurring revenue for the preceding three months. "Maintenance plan ARR" captures ARR relating to traditional maintenance attached to perpetual licenses. "Subscription plan ARR" captures ARR relating to subscription offerings. Refer to the definition of recurring revenue below for more details on what is included within ARR. Recurring revenue acquired with the acquisition of a business is captured when total subscriptions are captured in our systems and may cause variability in the comparison of this calculation.
