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Autodesk (ADSK) Q4 Loss Wider than Expected, Revenues Beat

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Autodesk Inc. (ADSK - Free Report) reported fourth-quarter fiscal 2017 (ended Jan 31, 2017) adjusted loss (including stock-based compensation expense but excluding all other non-recurring items) of 56 cents a share, wider than the Zacks Consensus Estimate of a loss of 49 cents. Revenues of $478.8 million topped the consensus mark of $474.1 million but fell nearly 26.2% year over year. Shares were down nearly 2% in the aftermarket session.

Management continues to emphasize that revenues, in the near term, will be impacted by the business model transition as revenues are now recognized “ratably” as against realized “upfront” earlier on.

Quarter Details

The company reported non-GAAP loss per share of 28 cents in the quarter against earnings of 21 cents in the year-ago quarter.

Revenues were impacted by a 52.5% year-over-year decline in License revenues to $156.3 million. Subscription revenues, however, were almost flat year over year at $322.5 million. However, deferred revenues increased 18% year over year to $1.79 billion.

Total subscriptions increased approximately 154K from the prior quarter to 3.11 million in the quarter. New model subscriptions (product, enterprise flexible license, and cloud subscription) increased approximately 227K from the last quarter to 1.09 million.

Autodesk, Inc. Price, Consensus and EPS Surprise


Autodesk, Inc. Price, Consensus and EPS Surprise | Autodesk, Inc. Quote

Geographically, revenues in the Americas decreased 18% year over year to $211 million. EMEA revenues declined 22% to $186 million, while the same in APAC decreased 46% from the year-ago quarter to $85 million.

Operating Results

Gross margin contracted 280 basis points (bps) from the year-ago quarter to 82.6% in the reported quarter.

Operating expenses were $563 million during the quarter, almost unchanged year over year. Autodesk’s loss from operations was $167.1 million, much wider than loss of $9.7 million reported in the year-ago quarter.

Balance Sheet

Autodesk exited the quarter with total cash and cash equivalents (including marketable securities) of $1.90 billion compared with $2.25 billion as on Jan 31, 2016.

Cash flow from operating activities for the year was $169.7 million compared with $414.1 million in last year.


For the first quarter of fiscal 2018, Autodesk expects revenues in the range of $460–$480 million. Non-GAAP loss per share is expected in the range of 21–27 cents for the quarter.

For fiscal 2018, Autodesk continues to expect revenues in the range of $2,000–$2,050 million. Non-GAAP loss is expected in the range of 56–73 cents. The company projects subscription additions for fiscal 2018 to be between 600,000 and 650,000. Total ARR is expected to be 24% to 26%. The company expects to keep non GAAP spend unchanged year over year.   

Our Take

Autodesk’s business transition from licenses to cloud-based services is expected to benefit it in the long run by boosting its subscriptions and deferred revenues. Autodesk is well positioned to capitalize on the rapid adoption of computer-aided designing and manufacturing through its comprehensive product portfolio. We expect its broad product portfolio to generate new customers in both domestic and overseas markets. 

Autodesk’s aggressive acquisition strategy has played a pivotal part in developing its business. Plus, Autodesk also expanded its share repurchase program in its efforts to maximize shareholder value. Cost cutting initiatives are also a big positive.

However, in the near term, the company’s financials may also be affected by increasing investments in cloud-based infrastructure and marketing initiatives. Foreign exchange fluctuations and competition in the cloud-computing domain from the likes of Inc. (AMZN - Free Report) , Microsoft Corp. (MSFT - Free Report) and Adobe Systems (ADBE - Free Report) also remain headwinds.

Presently, Autodesk carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Autodesk have registered impressive growth in the last one year. The stock generated a return of 55.84% compared with the Zacks Computer Software Services industry’s gain of 24.86%.

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