Strong New Model Subscriptions and ARR Growth; Business Model Transition On Track

SAN RAFAEL, Calif. — (BUSINESS WIRE) — February 25, 2016 — Autodesk, Inc. (NASDAQ: ADSK) today reported financial results for the fourth quarter and full fiscal year ended January 31, 2016.

Fourth Quarter Fiscal 2016

• Total subscriptions increased by approximately 109,000 from the third quarter of fiscal 2016 to 2.58 million at the end of the fourth quarter. New model subscriptions (Desktop, enterprise flexible license, and cloud subscription) increased by approximately 62,000 from the third quarter of fiscal 2016 to 427,000.
• Total annualized recurring revenue (ARR) was $1.38 billion, an increase of 10 percent compared to the fourth quarter last year as reported and 12 percent on a constant currency basis. New model ARR was $255 million and increased 68 percent compared to the fourth quarter last year as reported, and 74 percent on a constant currency basis.
• Deferred revenue increased 31 percent to $1.52 billion, compared to $1.16 billion in the fourth quarter last year.
• Total billings increased 15 percent compared to the fourth quarter last year as reported and 23 percent on a constant currency basis.
• Revenue was $648 million, a decrease of 2 percent compared to the fourth quarter last year as reported and an increase of 3 percent on a constant currency basis.
• Total GAAP spend (cost of revenue plus operating expenses) was $658 million, an increase of 1 percent compared to the fourth quarter last year.
• Total non-GAAP spend was $582 million, flat compared to the fourth quarter last year. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
• GAAP operating margin was (1) percent, compared to 2 percent in the fourth quarter last year.
• Non-GAAP operating margin was 10 percent, compared to 13 percent in the fourth quarter last year.
• GAAP diluted net loss per share was $(0.15). GAAP diluted net income per share was $0.05 in the fourth quarter last year.
• Non-GAAP diluted net income per share was $0.21, compared to $0.25 in the fourth quarter last year.
• Cash flow from operating activities was $170 million, compared to $257 million in the fourth quarter last year.

"We had a terrific fourth quarter and our results demonstrate that our business model transition is working. Broad-based demand also led to better than expected subscription additions in the fourth quarter with new model offerings representing well over half of the subscriptions," said Carl Bass, Autodesk president and CEO. "Strong demand also fueled double-digit growth in ARR, deferred revenue, and billings, and we booked a record number of large transactions. As planned, we ended sales of perpetual licenses of individual products at the end of the quarter. We were particularly encouraged that only a small portion of total unit volume was related to this final opportunity to purchase these perpetual licenses.”

Bass continued, “We’re starting fiscal 2017 from a position of strength. An increasing number of designers and engineers are subscribing to Autodesk’s portfolio and our recent restructuring allows us to accelerate investments in the transition while simultaneously reducing our spend growth. Looking forward, fiscal 2017 will be the most unique in the company’s history as we transition from selling perpetual licenses to subscriptions. The business model transition is broadening our addressable market and advancing our market leadership position. As such, we remain confident in our ability to achieve our long-term targets and ultimately drive long-term value creation for our shareholders with a much more predictable and profitable business.”

Fourth Quarter Operational Overview

Autodesk is undergoing a business model transition in which the company will discontinue selling new perpetual licenses in favor of subscriptions and flexible license arrangements. During the transition, billings, revenue, gross margin, operating margin, EPS, deferred revenue, and cash flow from operations will be impacted as more revenue is recognized ratably rather than up front and as new offerings bring a wider variety of price points.

Total subscriptions were 2.58 million, an increase of approximately 109,000 from the third quarter of fiscal 2016. New model subscriptions (Desktop, enterprise flexible license, and cloud subscription) were 427,000, an increase of 62,000 from the third quarter of fiscal 2016. The increase in new model subscriptions was led by Desktop subscriptions. Maintenance subscriptions were 2.15 million, an increase of 47,000 from the third quarter of fiscal 2016.

Total ARR for the fourth quarter increased 10 percent to $1.38 billion compared to the fourth quarter last year as reported, and 12 percent on a constant currency basis. New model ARR was $255 million and increased 68 percent compared to the fourth quarter last year as reported, and 74 percent on a constant currency basis. Maintenance ARR was $1.12 billion and increased 2 percent compared to the fourth quarter last year as reported, and 4 percent on a constant currency basis.

Revenue in the Americas was $257 million, an increase of 8 percent compared to the fourth quarter last year as reported and 9 percent on a constant currency basis. EMEA revenue was $238 million, a decrease of 13 percent compared to the fourth quarter last year as reported and 4 percent on a constant currency basis. Revenue in APAC was $153 million, a decrease of 1 percent compared to the fourth quarter last year as reported and an increase of 6 percent on a constant currency basis. Revenue from emerging economies was $94 million, a decrease of 12 percent compared to the fourth quarter last year as reported and 11 percent on a constant currency basis. Revenue from emerging economies represented 14 percent of total revenue in the fourth quarter.

Revenue from the Architecture, Engineering and Construction business segment was $254 million, an increase of 5 percent compared to the fourth quarter last year. Revenue from the Manufacturing business segment was $194 million, an increase of 2 percent compared to the fourth quarter last year. Revenue from the Platform Solutions and Emerging Business segment was $160 million, a decrease of 15 percent compared to the fourth quarter last year. Revenue from the Media and Entertainment business segment was $40 million, a decrease of 7 percent compared to the fourth quarter last year.

Revenue from Flagship products was $296 million, a decrease of 1 percent compared to the fourth quarter last year. Revenue from Suites was $232 million, a decrease of 7 percent compared to the fourth quarter last year. Revenue from New and Adjacent products was $120 million, an increase of 3 percent compared to the fourth quarter last year.

Financial Highlights for Fiscal 2016*

• Total subscriptions increased by approximately 345,000 to 2.58 million.
• New model subscriptions increased 94 percent and comprised 60 percent of the subscription additions.
• Total ARR increased 10 percent as reported and 12 percent on a constant currency basis.
• New model ARR increased 68 percent as reported and 74 percent on a constant currency basis.
• Total deferred revenue increased 31 percent to $1.52 billion.
• Total billings increased 5 percent as reported and 11 percent on a constant currency basis.
• Revenue was flat at $2.50 billion as reported and increased 4 percent on a constant currency basis.

*All numbers are compared to fiscal 2015.

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." Autodesk's business outlook for the first quarter and full year fiscal 2017 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 2017