This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Autodesk Inc. (ADSK: chart) on February 26, 2008.
President, Chief Executive Officer & Director: Carl Bass
Chief Financial Officer & Senior Vice President: Alfred J. Castino
Vice President of Finance & Investor Relations: Sue Pirri
Key Investors Issues
- Earnings per share were flat at 40 cents over the prior year.
- Quarterly revenue grew 20% over last year to $599 million.
- For fiscal 2007, revenues increased 18% over 2006 to $2.172 billion.
- For Q1, GAAP EPS are now expected to be in the range of 35 cents and 37 cents.
Fourth Quarter Fiscal 2008 Financial Highlights
GAAP diluted earnings per share were 40 cents.
Non-GAAP diluted EPS was 52 cents. Non-GAAP EPS came in at the low end of the firm’s guidance range, due to increase product development and sales and marketing spending. GAAP EPS came in lower than the guidance range. Earnings were impacted by significantly higher than planned commissions and commission accelerators, driven by the firm’s strong performance for the year and by the relative mix by individual, territory and geography.
Net revenues grew 20% to $599 million.
The license revenue increased 18% to $446 million and maintenance revenue from subscriptions increased 25% to $153 million. Combined upgrade revenue and maintenance revenue from subscriptions increased 1%. This is due to a decrease in total upgrade revenue of 36%. The firm has had continued success migrating customers to subscription all year, as demonstrated by the significant growth in deferred revenue. The company also had a difficult compare to the same period last year.
The company’s performance by geography was varied.
- Revenue in the Americas was $206 million, an increase of 2%.
- EMEA revenue was $262 million, an increase of 38% as reported and 27% cost in currency. Once again, the results in the EMEA emerging economies were particularly strong.
- Revenue in Asia Pacific as $131 million, an increase of 24% as reported and 21% cost in currency. Japan had another quarter of strong performance, led by healthy growth in AutoCAD LT, AutoCAD and Inventor.
The design solutions segment platform solutions in emerging businesses had a great quarter increasing revenue 19% to $263 million. AutoCAD posted strong revenue growth of 9% and AutoCAD LT had an outstanding growing 33%. In total, horizontal and 2D vertical products grew 14%.
Total revenue from
manufacturing solutions division increased 26% to $123 million once again, far exceeding the growth of the entire market. Revenue from new seats of Inventor series increased 50%, driving 20% revenue growth for the entire Inventor family. The company shipped more than 17,000 commercial seats of Inventor and more than 56,000 total seats for its many manufacturing products in the quarter.
Against tough compares from Q4 last year,
AEC Solutions revenue increased 22% to $137 million. Revenue from our Revit family of products increased 19%. The firm shipped approximately 21,000 commercial seats of Revit and NavisWorks. Civil 3D revenue grew 14% and the company shipped more than 7,500 commercial seats.
Revenue from
media and entertainment segment was $71 million, an increase of 10%. However, the trends in the firm’s two M&E businesses were very different. Both 3Ds Max and Miya had outstanding quarters, as 3D animation revenue increased 26%. Revenue from Advanced Systems declined 5%. The migration of our Advanced System solutions off of SGI hardware to mainstream systems continues to have a negative impact on revenues, given that the new hardware is less expensive. On a positive note, however, the change has substantially improved the Advanced Systems gross margins, which is a better measure of the health of the firm’s systems business.
A key growth driver for the company over the past several quarters has been the increasing revenue in emerging economies.
Quarterly revenue from emerging economies increased 25% sequentially at a robust 52% compared to the fourth quarter of last year. Revenue from emerging economies was 19% of total quarterly revenues, its highest percentage ever. In addition, the firm’s broader international geographies also posted solid performance. Combined revenue from Europe, Middle East Africa and Asia Pacific increased 33%. Even in constant currency, the business in these regions was strong. Importantly, the firm believes that its growth in these international markets, which represented 66% of total revenue in the fourth quarter remains robust and sustainable.
Another key driver for the business is the growth in the 3D design market.
The revenue from 3D solutions achieved record levels despite very difficult compares from strong LT gross grades in the fourth quarter of fiscal 2007. Revenue from 3D products increased 21% to $146 million and was 24% of total quarterly revenue. During the quarter, the firm shipped nearly 46,000 commercial seats of its 3D products Inventor, Revit, Civil 3D and NavisWorks. Although the firm is the leader in 3D, it still believes that there is a significant growth opportunity for Autodesk as 3D penetration of its customer base remains under 15%. While the firm has experienced very growth in the 3D market its important to recognize that its core base of 2D solutions continues to pose healthy double digit growth, led by outstanding results in AutoCAD LT. Strong growth in 2D creates future opportunity as well because the firm’s 2D solutions provide the easiest migration path to 3D products and then to digital prototyping.
Autodesk’s performance in the Americas did not match its robust international results.
The Americas which grew 2% were impacted by a number of factors including increasing economic headwinds, difficult year-over-year economic comparison for upgrades and cross grades as well as execution issues. The programs that the firm put in place over the last 18 months are having the desired effect, but there are areas where the firm needs to improve performance. The firm is taking actions and as a result, it is optimistic about improving its performance in the Americas over the course of fiscal 2009.
