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Autodesk (ADSK) Q2 Earnings Top, Subscription Revenues Up Y/Y
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Autodesk (ADSK - Free Report) reported second-quarter fiscal 2019 non-GAAP earnings of 19 cents per share, which beat the Zacks Consensus Estimate by couple of cents. In the year-ago quarter, the company reported non-GAAP loss of 11 cents.
Revenues of $611.7 million beat the consensus mark and increased nearly 22% year over year. The figure was better than management’s guidance of $595-$605 million.
Billings of $605 million surged 27% year over year, driven by growth in subscription plan billings, particularly product subscription.
Moreover, total deferred revenues increased 20% to $2.21 billion in the quarter, which reflects growing strength of the business model. Total recurring revenues were 96%, a significant increase from 91% reported in the year-ago quarter.
Notably, shares jumped almost 8% in pre-marketing trading. Autodesk returned 30.1% year-to-date, substantially outperforming the industry’s 22.5% rally.
Revenue Details
Autodesk’s business model transition continues to be on track. Subscription revenues (68.8% of revenues) soared 114.5% year over year (111% at constant currency) to $420.6 million, driven by strong growth in subscription plan revenues, well-supported by higher product subscriptions.
However, maintenance revenues (27.2% of revenues) declined 36.4% from the year-ago quarter to $166.4 million, primarily due to continued migration of maintenance plan subscriptions to subscription plan.
Revenues were also impacted by a 43.7% year-over-year decline in other revenues (4% of revenues), which totaled $24.7 million in the quarter. The decline was primarily attributed to decrease in license revenues.
Geographically, revenues from Americas increased 16% from the year-ago quarter to $248 million. Europe, Middle East and Africa (EMEA) revenues jumped 25% to $248 million. Asia-Pacific soared 31% to $116 million.
Revenues from Emerging Economies jumped 38% year over year to $74 million. Emerging economies accounted for 12% of revenues in the reported quarter.
Architecture, Engineering and Construction (AEC) revenues increased 28% year over year to $243 million. AutoCAD Product Family and AutoCAD LT revenues jumped 30% to $177 million.
Both Manufacturing, and Media and Entertainment (M&E) segments’ revenues grew 10% from the year-ago quarter to $146 million and $42 million, respectively.
However, other revenues declined 33% year over year to $4 million.
Annualized Recurring Revenues (ARR) Detail
Total annualized recurring revenues (ARR) were $2.35 billion, up 28% from the year-ago quarter, driven by higher product subscription. Core business ARR (combination of maintenance, product, and enterprise business agreement (EBA)) subscriptions were $2.27 billion, up 29% year over year.
Cloud business ARR increased 21% to $75 million, which was mostly from BIM 360. Autodesk added 31,000 subscribers in the BIM 360 product line.
Subscription plan ARR of $1.68 billion increased 115% year over year, driven by growth in all subscription plan types, primarily supported by product subscription including the maintenance-to-subscription (M2S) program (revenues of $342 million).
However, maintenance plan ARR of $666 million declined 36% from the year-ago quarter, primarily due to the ongoing migration of maintenance plan subscriptions to product subscriptions through the M2S program.
Subscription plan subscriptions increased 290K sequentially to 2.86 million in the second quarter. Subscription plan subscriptions benefited from 117K maintenance subscribers that converted to product subscription under the M2S program. Total subscriptions increased 119K sequentially to 3.94 million.
Autodesk is also benefiting from its investment in digital infrastructure. The company’s e-store generated nearly 20% of products subscription revenues and grew more than 75% in the reported quarter. New customers represented about 25% and contributed a significant portion of subscription additions.
Operating Results
Non-GAAP gross margin expanded 310 basis points (bps) from the year-ago quarter to 89.8%.
Research & development, sales & marketing, and general & administrative expenses, as a percentage of revenues, declined 810 bps, 310 bps and 50 bps, respectively.
As a result, non-GAAP operating expenses as a percentage of revenues declined to 80.7% from 92.4% reported in the year-ago quarter.
Autodesk reported non-GAAP operating income of $55.6 million in the quarter against the year-ago quarter’s operating loss of $28.8 million.
Balance Sheet
As of Jul 31, 2018, Autodesk had cash and cash equivalents (including marketable securities) of $1.29 billion compared with $1.46 billion as of Apr 30, 2018.
Total debt at the end of the second quarter was $1.59 billion.
The company generated $43 million of cash flow from operating activities compared with $17 million of cash outflow in the previous quarter.
Autodesk repurchased 1.1 million shares for $147 million in the quarter.
Guidance
For third-quarter fiscal 2019, Autodesk expects revenues between $635 million and $645 million. Non-GAAP earnings are anticipated in the range of 24-28 cents per share.
For fiscal 2019, management now expects revenues between $2.485 billion and $2.505 billion, which reflect growth of 21-22%. Billings are projected to be in the range of $2.580-$2.640 billion.
Autodesk maintained its earlier guidance for subscription additions in the range of 500K and 550K. Total ARR is still expected to be in the range of 28-30%.
Non-GAAP spend growth (cost of revenue plus operating expenses) is expected to increase 1-2%. Moreover, non-GAAP earnings are now expected in the range of 87-95 cents per share.
Long-term earnings growth rate for Aspen, CommVault and Konami is projected to be 16.5%, 15.8% and 25%, respectively.
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Autodesk (ADSK) Q2 Earnings Top, Subscription Revenues Up Y/Y
Autodesk (ADSK - Free Report) reported second-quarter fiscal 2019 non-GAAP earnings of 19 cents per share, which beat the Zacks Consensus Estimate by couple of cents. In the year-ago quarter, the company reported non-GAAP loss of 11 cents.
Revenues of $611.7 million beat the consensus mark and increased nearly 22% year over year. The figure was better than management’s guidance of $595-$605 million.
Billings of $605 million surged 27% year over year, driven by growth in subscription plan billings, particularly product subscription.
Moreover, total deferred revenues increased 20% to $2.21 billion in the quarter, which reflects growing strength of the business model. Total recurring revenues were 96%, a significant increase from 91% reported in the year-ago quarter.
Notably, shares jumped almost 8% in pre-marketing trading. Autodesk returned 30.1% year-to-date, substantially outperforming the industry’s 22.5% rally.
Revenue Details
Autodesk’s business model transition continues to be on track. Subscription revenues (68.8% of revenues) soared 114.5% year over year (111% at constant currency) to $420.6 million, driven by strong growth in subscription plan revenues, well-supported by higher product subscriptions.
However, maintenance revenues (27.2% of revenues) declined 36.4% from the year-ago quarter to $166.4 million, primarily due to continued migration of maintenance plan subscriptions to subscription plan.
Revenues were also impacted by a 43.7% year-over-year decline in other revenues (4% of revenues), which totaled $24.7 million in the quarter. The decline was primarily attributed to decrease in license revenues.
Autodesk, Inc. Price, Consensus and EPS Surprise
Autodesk, Inc. Price, Consensus and EPS Surprise | Autodesk, Inc. Quote
Geographically, revenues from Americas increased 16% from the year-ago quarter to $248 million. Europe, Middle East and Africa (EMEA) revenues jumped 25% to $248 million. Asia-Pacific soared 31% to $116 million.
Revenues from Emerging Economies jumped 38% year over year to $74 million. Emerging economies accounted for 12% of revenues in the reported quarter.
Architecture, Engineering and Construction (AEC) revenues increased 28% year over year to $243 million. AutoCAD Product Family and AutoCAD LT revenues jumped 30% to $177 million.
Both Manufacturing, and Media and Entertainment (M&E) segments’ revenues grew 10% from the year-ago quarter to $146 million and $42 million, respectively.
However, other revenues declined 33% year over year to $4 million.
Annualized Recurring Revenues (ARR) Detail
Total annualized recurring revenues (ARR) were $2.35 billion, up 28% from the year-ago quarter, driven by higher product subscription. Core business ARR (combination of maintenance, product, and enterprise business agreement (EBA)) subscriptions were $2.27 billion, up 29% year over year.
Cloud business ARR increased 21% to $75 million, which was mostly from BIM 360. Autodesk added 31,000 subscribers in the BIM 360 product line.
Subscription plan ARR of $1.68 billion increased 115% year over year, driven by growth in all subscription plan types, primarily supported by product subscription including the maintenance-to-subscription (M2S) program (revenues of $342 million).
However, maintenance plan ARR of $666 million declined 36% from the year-ago quarter, primarily due to the ongoing migration of maintenance plan subscriptions to product subscriptions through the M2S program.
Subscription plan subscriptions increased 290K sequentially to 2.86 million in the second quarter. Subscription plan subscriptions benefited from 117K maintenance subscribers that converted to product subscription under the M2S program. Total subscriptions increased 119K sequentially to 3.94 million.
Autodesk is also benefiting from its investment in digital infrastructure. The company’s e-store generated nearly 20% of products subscription revenues and grew more than 75% in the reported quarter. New customers represented about 25% and contributed a significant portion of subscription additions.
Operating Results
Non-GAAP gross margin expanded 310 basis points (bps) from the year-ago quarter to 89.8%.
Research & development, sales & marketing, and general & administrative expenses, as a percentage of revenues, declined 810 bps, 310 bps and 50 bps, respectively.
As a result, non-GAAP operating expenses as a percentage of revenues declined to 80.7% from 92.4% reported in the year-ago quarter.
Autodesk reported non-GAAP operating income of $55.6 million in the quarter against the year-ago quarter’s operating loss of $28.8 million.
Balance Sheet
As of Jul 31, 2018, Autodesk had cash and cash equivalents (including marketable securities) of $1.29 billion compared with $1.46 billion as of Apr 30, 2018.
Total debt at the end of the second quarter was $1.59 billion.
The company generated $43 million of cash flow from operating activities compared with $17 million of cash outflow in the previous quarter.
Autodesk repurchased 1.1 million shares for $147 million in the quarter.
Guidance
For third-quarter fiscal 2019, Autodesk expects revenues between $635 million and $645 million. Non-GAAP earnings are anticipated in the range of 24-28 cents per share.
For fiscal 2019, management now expects revenues between $2.485 billion and $2.505 billion, which reflect growth of 21-22%. Billings are projected to be in the range of $2.580-$2.640 billion.
Autodesk maintained its earlier guidance for subscription additions in the range of 500K and 550K. Total ARR is still expected to be in the range of 28-30%.
Non-GAAP spend growth (cost of revenue plus operating expenses) is expected to increase 1-2%. Moreover, non-GAAP earnings are now expected in the range of 87-95 cents per share.
Zacks Rank & Stocks to Consider
Autodesk currently carries Zacks Rank #4 (Sell).
Some better-ranked stocks in the same industry include Aspen Technology (AZPN - Free Report) , CommVault Systems (CVLT - Free Report) and Konami , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Aspen, CommVault and Konami is projected to be 16.5%, 15.8% and 25%, respectively.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>