New Model Subscriptions Drive Business Model Transition

SAN RAFAEL, Calif. — (BUSINESS WIRE) — November 29, 2016 — Autodesk, Inc. (NASDAQ: ADSK) today reported financial results for the third quarter of fiscal 2017.

Third Quarter Fiscal 2017

• New model subscriptions increased 168,000 from the second quarter of fiscal 2017 to 861,000.
• Total subscriptions increased 134,000 from the second quarter of fiscal 2017 to 2.95 million at the end of the third quarter and include approximately 13,000 maintenance subscriptions related to the recent acquisition of Solid Angle.
• New model annualized recurring revenue (ARR) was $414 million and increased 88 percent compared to the third quarter last year as reported, and 91 percent on a constant currency basis.
• Total ARR was $1.50 billion, an increase of 11 percent compared to the third quarter last year as reported, and 15 percent on a constant currency basis.
• Deferred revenue increased 26 percent to $1.53 billion, compared to $1.21 billion in the third quarter last year.
• Revenue was $490 million, a decrease of 18 percent compared to the third quarter last year as reported, and 16 percent on a constant currency basis. During Autodesk's business model transition, revenue is negatively impacted as more revenue is recognized ratably rather than up front and as new offerings generally have a lower initial purchase price.
• Total GAAP spend (cost of revenue plus operating expenses) was $610 million, a decrease of 1 percent compared to the third quarter last year. GAAP spend includes a charge of $3 million for a previously announced restructuring and other facility exit costs.
• Total non-GAAP spend was $533 million, a decrease of 2 percent compared to the third quarter last year. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables.
• GAAP diluted net loss per share was $(0.64). GAAP diluted net loss per share was $(0.19) in the third quarter last year.
• Non-GAAP diluted net loss per share was $(0.18), compared to non-GAAP diluted net income per share of $0.14 in the third quarter last year.

"We are pleased with our results for the quarter, which were driven by strong growth in product subscription," said Carl Bass, Autodesk president and CEO. "This was the first quarter of selling only subscriptions, a significant milestone in our business model transition. We also had a record-breaking quarter for cloud subscription additions, driven by continued momentum of BIM 360 and Fusion 360. Coupled with diligent cost control, we continue to progress steadily to our fiscal year 2020 goals."

Third Quarter Operational Overview

"We experienced robust demand in the third quarter building on the momentum of a very strong second quarter," said Scott Herren, Autodesk Chief Financial Officer. "Record new model subscription additions and continued cost control contributed to our better than expected third quarter results and demonstrates solid progress on the business model transition."

New model subscriptions (product, enterprise flexible license, and cloud subscription) were 861,000, a net increase of 168,000 from the second quarter of fiscal 2017. The increase in new model subscriptions was led by product subscriptions. Maintenance subscriptions were 2.09 million, a net decrease of 34,000 from the second quarter of fiscal 2017 and include the addition of 13,000 maintenance subscriptions associated with the March 2016 acquisition of Solid Angle. Total subscriptions were 2.95 million, a net increase of 134,000 from the second quarter of fiscal 2017.

New model ARR was $414 million and increased 88 percent compared to the third quarter last year as reported, and 91 percent on a constant currency basis. Maintenance ARR was $1.08 billion and decreased 4 percent compared to the third quarter last year as reported, and was flat on a constant currency basis. Total ARR for the third quarter increased 11 percent to $1.50 billion compared to the third quarter last year as reported, and 15 percent on a constant currency basis. Total ARR growth was impacted by the allocation of existing marketing development funds (MDF) this quarter. MDF is recorded as contra revenue and historically was predominantly allocated against license revenue. With the end of sale of perpetual licenses, MDF is now allocated against recurring revenue, negatively impacting new model ARR growth by 6 percentage points, maintenance ARR growth by 2 percentage points, and total ARR growth by 3 percentage points.