CIMdata PLM Industry Summary Online Archive
17 November 2005
Financial News
Autodesk Reports Record Revenues Of $378 Million Raises Guidance
Autodesk, Inc. announced financial results for its third fiscal quarter ended October 31, 2005. For the third quarter, Autodesk reported record net revenues of $378 million, a 26 percent increase over $300 million reported in the third quarter of the prior year.
Third quarter net income was $95 million, or $0.38 per diluted share on a GAAP basis and $77 million, or $0.31 per diluted share on a non-GAAP basis. The only adjustment to non-GAAP net income in the current quarter was the exclusion of $18 million in tax benefits. Net income in the third quarter of the prior year was $74 million, or $0.30 per diluted share on a GAAP basis, and $48 million, or $0.19 per diluted share on a non-GAAP basis.
"Solid execution drove another outstanding performance for Autodesk," said Carol Bartz, Autodesk chairman and CEO. "Revenues and profitability increased significantly over last year, driven by strong demand for our products across all divisions and all markets."
Autodesk's performance was driven by strong growth in new seats and subscriptions, increasing penetration of its vertical and 3D products and continued improvement in profitability.
Unlike trends at most major software companies, revenues from new seats and emerging businesses continued to be strong, representing approximately two-thirds of total revenues in the third quarter. Revenues from new commercial seats increased 23 percent over the third quarter of the prior year.
Combined revenues from subscription and upgrades increased 34 percent over the third quarter of fiscal 2005. Consistent with company strategy, subscription revenues, which are called maintenance in the financial statements, increased 62 percent over last year. Combined revenues from subscription and upgrades continue to represent approximately one-third of total revenues.
The company's vertical and 3D products continue to increase their market penetration. In the third quarter, combined revenues from new commercial seats of the Autodesk Inventor Series, Autodesk Inventor Professional, Autodesk Revit Building, Autodesk AutoCAD Revit Series, Autodesk Revit Structure and Autodesk Civil 3D software increased more than 100 percent over the prior year.
During the quarter, Autodesk improved profitability. Operating margins increased to 25 percent on a GAAP and non-GAAP basis. Operating margins were 18 percent on a GAAP basis and 19 percent on a non-GAAP basis in the third quarter of last year.
"I am very confident about the future," said Bartz. "We are investing in the business to drive strong growth in the future. Despite the significant negative impact of foreign currency rates, we are raising our guidance for the fourth quarter and for fiscal 2007."
Business Outlook
The following statements are forward looking statements which are based on current expectations and which involve risks and uncertainties some of which are set forth below.
Alias Acquisition Update
On October 4, 2005, Autodesk announced that it had signed a definitive agreement to acquire Alias. The company currently estimates that the transaction will close late in the fourth fiscal quarter ending January 31, 2006 or early in the first quarter of fiscal 2007, subject to satisfaction of normal regulatory and other closing conditions.
In the first six months after closing, this acquisition is expected to be dilutive to earnings on a non-GAAP basis. In determining the impact of the acquisition on non-GAAP earnings per share, we excluded in-process R&D expenses, acquisition-related restructuring costs, equity-based compensation expenses, and the reduction of deferred revenues assumed by Autodesk as required by US GAAP. In the first twelve months after closing, this acquisition is expected to be slightly accretive to earnings per share on a non-GAAP basis. Autodesk is currently unable to provide estimates of the future impact of this transaction on GAAP earnings per share.
All forward looking statements are for the Autodesk business on a standalone basis, not taking into account the potential impact of the Alias acquisition, unless specifically stated otherwise.
Fourth Quarter Fiscal 2006
Net revenues for the fourth quarter of fiscal 2006 are expected to be between $405 and $415 million. GAAP earnings per diluted share are expected to be between $0.34 and $0.36.
Full Year Fiscal 2006
For fiscal year 2006, net revenues are expected to be between $1.511 and $1.521 billion. GAAP earnings per diluted share are expected to be between $1.32 and $1.34. Non-GAAP earnings per diluted share are expected to be between $1.24 and $1.26. Non-GAAP earnings per share exclude non-recurring tax benefits.
First Quarter Fiscal 2007
Net revenues for the first quarter of fiscal 2007 are expected to be between $400 and $410 million. GAAP earnings per diluted share are expected to be between $0.25 and $0.27. Non-GAAP earnings per diluted share are expected to be between $0.31 and $0.33 excluding the impact of stock based compensation expenses.
Full Year Fiscal 2007
For fiscal year 2007, net revenues are expected to increase in the range of 10 to 12 percent as compared to current guidance for fiscal 2006. On a constant currency basis, projected net revenue growth would have been approximately three percentage points higher or 13 to 15 percent. GAAP earnings per diluted share are expected to be between $1.16 and $1.20. Non-GAAP earnings per diluted share are expected to be between $1.41 and $1.45. Non-GAAP earnings per share exclude the impact of stock based compensation expenses.
Fiscal 2006 EPS guidance is based on Autodesk's 20 percent estimated tax rate excluding non-recurring tax benefits. As previously indicated, Autodesk believes that its effective tax rate will increase in fiscal 2007. Autodesk now believes the effective tax rate will be 23 percent in fiscal year 2007.
A reconciliation of the above non-GAAP operating margin, net income and EPS amounts to the corresponding GAAP amounts is provided at the end of this press release.
Further information on potential factors that could affect the financial results of Autodesk are included in the company's report on Form 10-K for the year ended January 31, 2005 and Form 10-Q for the quarter ended July 31, 2005, which are on file with the Securities and Exchange Commission.
Autodesk will host its third quarter earnings announcement today at 5:00 p.m. EDT. A replay of the call will be available at 4:00pm PDT on our website at http://www.autodesk.com/investors or by dialing 888-286-8010 or 617-801-6888 (passcode: 40320593). An audio webcast will also be available beginning at 5:00 p.m. EDT at http://www.autodesk.com/investors . A replay of this webcast will be maintained on our website for at least twelve months.
Detailed financials are available at http://images.autodesk.com/adsk/files/Q306_earnings_release_financials_final.pdf
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