This summary is based on the third quarter fiscal 2008 earnings call conducted by Autodesk Inc. (ADSK: chart) on November 15, 2007.
Chief Executive Officer: Carl Bass
Chief Financial Officer: Al Castino
Vice President of Investor Relations: Sue Pirri
Key Investors Issues
- The earnings per share rose to 49 cents from 35 cents in the prior year.
- Quarterly revenue grew from $456.8 million in last year to $538 million.
- The firm expects Q4 revenue to be in the range of $575 million to $585 million.
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Third Quarter Fiscal 2008 Financial Highlights
Diluted earnings per share were 35 cents on a GAAP basis and 49 cents on non-GAAP basis.
Net income was $85 million GAAP and $117 million non-GAAP.
Quarterly revenue was a record $538 million, an 18% increase over last year.
Revenue from both 3D solutions and 2D Vertical solutions were at record levels, resulting in revenues from Design Solution segment increasing 20%. The changes that the firm implemented in its partner incentive programs in the first quarter continue to increase reseller attention on most significant opportunities for growth. Revenue from 2D Vertical and 3D products increased 22% and 32% respectively. 3D revenue now represents 24% of total quarterly revenue, its highest level ever. 3D still presents a significant growth opportunity, as 3D penetration of the customer base remained under 15%. Clearly 3D continues to be an important growth driver for the company, and 2D Vertical solutions provide the easiest migration path for customers to the firm’s 3D products and then on to digital prototyping.
Last quarter, the firm completed the acquisition of NavisWorks. The NavisWorks family of products fully enables the benefits of 3D models for design coordination and construction simulation, and accordingly to be included in the 3D revenue starting in the third quarter. NavisWorks revenue was $3 million in the quarter, resulting in total 3D revenue of $130 million, a 32% increase. Combined upgrade revenue and maintenance revenue from subscription increased 15%. Maintenance revenue from subscriptions was $143 million, an increase of 29%. As expected, revenue from upgrades and cross-grades decreased 16%.
Revenue from new seats increased 20%. During the quarter, Autodesk shipped nearly 43,000 commercial seats for Inventor, Revit and Civil 3D. Revenue from these products increased 29% to $127 million.
Each of the geographies grew substantially.
Revenue in the Americas was $218 million, an increase of 12%. EMEA revenues were $203 million, an increase of 27% as recorded, and 18% constant currency. Asia-Pacific revenues increased 14% to $118 million. Japan had another good quarter of execution. The firm’s business in Japan has stabilized and is now growing. The firm remains optimistic about continued improvement going forward.
Revenue growth in emerging economies continues to significantly outpace growth in developed economies. Quarterly revenue in emerging economies increased 31% to $92 million and represents 17% of total quarterly revenue, its highest percentage ever.
Revenue by Segment
Revenues from the
Design Solution segment increased 20% to $457 million. Within Design Solutions, revenue from platform solutions and emerging businesses increased 14% to $242 million. AutoCAD LT had an outstanding quarter, growing 35%. The changes in the incentive programs have shifted reseller focus away from AutoCAD to 2D Vertical and 3D products. As a result, AutoCAD revenue was flat, while AutoCAD 2D Vertical revenue increased 22%. The firm continues to believe that the most relevant measure of 2D performance, given its strategy, is the growth of all AutoCAD-based products in total, which grew 16%.
Total revenue for
Manufacturing and Solutions division increased 19% to $102 million. This far exceeds the growth of the firm’s closest competitor. Revenue from new seats in the center increased 22%. The company shipped more than 13,400 commercial seats in the center in the quarter. AutoCAD mechanical had another great quarter, increasing revenues 30%. In total, the firm shipped more than 54,000 seats of its Manufacturing products. AEC Solution''s revenue includes NavisWorks and increased 34% to $124 million. The building industry continues its rapid adoption of building information modeling, both in the U.S. and abroad, driving strong record results. Revenue from Revit family of products increased 53% and the firm shipped more than 21,400 commercial seats. Civil 3D also had a great quarter, growing revenue 31%, and the firm we shipped nearly 8,200 commercial seats.
Revenue from
Media & Entertainment segment was $67 million, an increase of 4%. However, the trends in two M&E businesses were very different. Animation revenue increased 17%, led by an outstanding quarter for 3ds Max. Revenue from advanced systems declined 8% as the move off SGI hardware continues to have a negative impact on revenues. This change has substantially improved the system''s gross margin, however.
The gross margins increased 2 percentage points on a GAAP basis to 90%, and 3-percentage points non-GAAP to 91%.
The improvement was primarily due to the increased gross margins on the firm’s advanced system solutions. In addition, strong software license sales and productivity improvements in operation contributed to the increase in gross margin.
- Operating expenses were $381 million GAAP and $341 million non-GAAP.
- Operating income was $106 million GAAP and $151 million non-GAAP.
- The operating margin was 20% GAAP and 28% non-GAAP.
