This is a summary of the fourth quarter fiscal 2009 earnings call conducted by Autodesk, Inc. (ADSK) on February 26, 2009.
Management:
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President and CEO: Carl Bass
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VP, Finance: Sue Pirri
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Director, IR: David Gennarelli
Key Investor Issues:
- For the quarter Autodesk lost $105.3 million, or 47 cents per share, compared with profit of $96.5 million, or 40 cents per share, a year ago.
- Fourth-quarter loss was due to impairment charges related to the company’s media and entertainment business and as sales declined.
- Excluding charges, Autodesk earned 31 cents per share.
- Revenue dropped 18% to $489.8 million from $599 million last year.
Fourth Quarter Highlights:
The global economic downturn is now significantly impacting each of the company’s major geographies and all of the business segments. The current global economic malaise is unlike any downturn experienced in the past.
- As a result, total revenue for the fourth quarter was $490 million, a decrease of 18%.
- License and other revenue decreased 30% due to a 33% decline in new seat license revenue.
Revenue performance in the Americas declined 17%.
Weakness was seen across the entire region. The Americas has experienced weakness for five quarters now and it’s not yet clear if it has hit bottom. On the positive side, Autodesk continues to make strong inroads with its government sales.
Revenue from Asia Pacific decreased 25% as reported and 28% at constant currency as a result of economic headwinds in large developed markets like Japan, Korea, and Australia.
The company also experienced significant year-over-year declines in emerging countries, such as China and India.
Most of the APAC countries are now facing a decrease in building and manufacturing production resulting from reduced trade with areas like the U.S. and Western Europe. EMEA revenue decreased 16% as reported and 8% constant currency. Similar to APAC, the growth rates in emerging countries decreased more dramatically than developed economies. In total, revenue from emerging countries declined 31% and represented 16% of total revenue for the quarter.
As a group, the company’s model-based 3D design solutions fared better than the 2D products.
The model-based 3D design solutions decreased 1% to $144 million, and represented 29% of total revenue for the quarter. The company shipped approximately 30,000 commercial seats of these products in the fourth quarter. The 2D horizontal products, AutoCAD and AutoCAD LT declined 29%. Revenue from 2D vertical products decreased 21%.
To address the lower expectations for sales, last month the company announced a restructuring plan which will reduce operating expenses by approximately $130 million annually.
Some savings will be generated in the first quarter, but the company expects to realize the full quarterly impact of the reductions starting in the second quarter. The savings are being achieved through headcount reduction of approximately 10%, facilities consolidations, a hiring freeze, travel restrictions and a variety of other cost reduction initiatives. In addition, the company is making significant adjustments as part of its ongoing effort to size the business correctly.
Net revenue was $490 million, a decrease of 18% as reported and 15% constant currency.
- Revenue from new seats decreased 33%.
- Total upgrade revenue, including cross-grades, decreased 32%.
- Maintenance revenue was $180 million, an increase of 17% compared to the fourth quarter of last year. This was a slight decline sequentially due to lower year over year maintenance billings.
Breaking revenue down by segment:
- Platform Solutions decreased 24% to $201 million.
- Revenue from Manufacturing Solutions division decreased 6% to $115 million.
- Revenue from Inventor family of products decreased 21% as demand was particularly weak in Asia Pacific.
During the quarter, the company shipped approximately 6,100 commercial seats of its 3D manufacturing products and approximately 39,000 seats of the manufacturing products in total.
