This is a summary of the third quarter fiscal 2009 earnings call conducted by Autodesk, Inc. (ADSK) on November 20, 2008.
Management:
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President, Chief Executive Officer: Director Carl Bass
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Vice President of Finance: Sue Pirri
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Director of Investor Relations: David Gennarelli
Key Investor Issues:
- Autodesk earned 40 cents per share, or 52 cents per share on an adjusted basis, on $599.1 million in revenue in the fiscal fourth quarter a year ago.
- Net revenue was $607 million, up of 13% as reported and 9% constant currency.
- For the fourth quarter the design software maker forecast a profit of 13 cents to 19 cents per share, or 28 cents to 34 cents per share on an adjusted basis, and revenue of $525 million to $550 million.
- Fiscal fourth-quarter earnings are expected to fall from year-ago results.
Third Quarter Highlights:
- Revenue from new seats grew 6%.
- Total upgrade revenue, including cross-grade, decreased 4%.
- Maintenance revenue increased 31% to $186 million.
Revenue by segment:
- Platform solutions increased 11% to $269 million.
- Revenue from manufacturing solutions division increased 22% to $124 million.
- Moldflow contributed approximately $12 million in the quarter.
- Revenue from Inventor family of products increased 8%.
During the quarter, the company shipped approximately 9,000 commercial seats of Inventor and Moldflow and approximately 44,000 seats of the manufacturing products in total.
The AEC segment increased 8% to $134 million.
Revenue from our Revit family of products grew 23%. The company shipped approximately 32,000 commercial seats of Revit, Civil 3D, NavisWorks, and Robobat. Sales of Civil3D have been greatly impacted as the AEC market has been hit hard in this environment.
Revenue from the media and entertainment segment was $73 million, up 9%.
Revenue from advanced systems was flat. Animation revenue increased 16%, driven by continued strong demand for the 3DS Max product.
Moving to the rest of the income statement, gross margins were 91% on a GAAP basis and 93% non-GAAP. The operating margin was 23% GAAP and 29% non-GAAP. During the quarter, the company adjusted accruals for the annual performance based incentive plans to reflect the current performance.
In addition, Autodesk reduced the operating expense run-rate by implementing a hiring freeze in October, as well as by reducing discretionary spending. These actions resulted in lower expenses and higher operating margins, net income, and earnings per share than originally expected.
The tax rate in the quarter was 23% GAAP and 25% non-GAAP.
- The lower-than-expected tax rate is due to a foreign tax refund related to prior years.
- GAAP diluted earnings per share increased 29% to $0.45.
- Non-GAAP diluted EPS was $0.56, up 14% over the third quarter of last year.
The impact of foreign currency exchange rates was $18 million favorable on revenue and $3 million unfavorable on expenses, compared to the third quarter last year. The foreign currency impact was $14 million unfavorable on revenue and $7 million favorable on expenses when compared to the second quarter of this year.
Cash and investments were $941 million.
At the end of the quarter, more than 80% of the cash and investments was off-shore. During the quarter, the company paid down most of the outstanding balance on the lines of credit but it will continue to utilize its lines as needed.
- Deferred revenue was up 18% year over year and down 11% sequentially to $499 million, due to the impact of a strengthening dollar and lower subscription billings.
- Cash from operating activities was $107 million and was lower sequentially due primarily to the decrease in deferred revenue, as well as other accruals.
- Unshipped product orders or shippable backlog decreased by $23 million sequentially to $6 million.
Total backlog, including deferred revenue and unshipped product orders, was $505 million, an increase of $65 million over last year.
The channel inventory was approximately three weeks. DSOs were 44 days this quarter, decreasing sequentially primarily due to lower billings.
