Autodesk Reports Solid Q1; Strong Subscriptions Growth

_____________________

(1) Effective in second quarter of fiscal 2015, Autodesk elected to present amortization of purchased customer relationships, trade names, patents, and user lists as a separate line item within operating expenses. As a result, amortization previously reflected in “General and Administrative” expense was reclassified to “Amortization of Purchased Intangibles" within Operating Expenses. Prior period amounts have been revised to conform to the current period presentation.


Autodesk, Inc.
Condensed Consolidated Balance Sheets
(In millions)

	April 30, 2015			January 31, 2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,182.7		$	1,410.6
Marketable securities	648.2			615.8
Accounts receivable, net	316.0			458.9
Deferred income taxes, net	81.2			85.1
Prepaid expenses and other current assets	112.9			100.9
Total current assets	2,341.0			2,671.3
Marketable securities	440.3			273.0
Computer equipment, software, furniture and leasehold improvements, net	156.9			159.2
Developed technologies, net	84.8			86.5
Goodwill	1,476.1			1,456.2
Deferred income taxes, net	106.8			100.0
Other assets	170.0			167.6
Total assets	$	4,775.9		$	4,913.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	93.1		$	100.5
Accrued compensation	163.6			253.3
Accrued income taxes	29.0			28.2
Deferred revenue	893.4			900.8
Other accrued liabilities	91.2			117.3
Total current liabilities	1,270.3			1,400.1
Deferred revenue	260.3			256.3
Long term income taxes payable	139.6			158.8
Long term notes payable, net of discount	747.4			747.2
Other liabilities	133.9			132.2
Stockholders’ equity:
Preferred stock	—			—
Common stock and additional paid-in capital	1,816.2			1,773.1
Accumulated other comprehensive loss	(56.0		)	(53.3		)
Retained earnings	464.2			499.4
Total stockholders’ equity	2,224.4			2,219.2
Total liabilities and stockholders' equity	$	4,775.9		$	4,913.8


Autodesk, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)

	Three Months Ended April 30,
	2015			2014
	(Unaudited)
Operating activities:
Net income	$	19.1		$	28.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	37.8			36.1
Stock-based compensation expense	50.2			33.6
Deferred income taxes	(5.3		)	21.1
Restructuring charges, net	—			2.3
Other operating activities	(3.5		)	8.3
Changes in operating assets and liabilities, net of business combinations
Accounts receivable	143.1			117.2
Prepaid expenses and other current assets	(22.4		)	(1.6		)
Accounts payable and accrued liabilities	(110.8		)	(44.8		)
Deferred revenue	(3.4		)	52.5
Accrued income taxes	(18.3		)	(34.3		)
Net cash provided by operating activities	86.5			218.7
Investing activities:
Purchases of marketable securities	(485.2		)	(306.4		)
Sales of marketable securities	97.5			59.2
Maturities of marketable securities	192.4			163.1
Capital expenditures	(12.5		)	(14.5		)
Acquisitions, net of cash acquired	(34.5		)	(322.3		)
Other investing activities	(10.6		)	(0.8		)
Net cash used in investing activities	(252.9		)	(421.7		)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs	34.1			62.2
Repurchase and retirement of common stock	(95.4		)	(102.5		)
Net cash used in financing activities	(61.3		)	(40.3		)
Effect of exchange rate changes on cash and cash equivalents	(0.2		)	(0.1		)
Net decrease in cash and cash equivalents	(227.9		)	(243.4		)
Cash and cash equivalents at beginning of fiscal year	1,410.6			1,853.0
Cash and cash equivalents at end of the period	$	1,182.7		$	1,609.6


Autodesk, Inc.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(In millions, except per share data)

To supplement our consolidated financial statements presented on a GAAP basis, Autodesk provides investors with certain non-GAAP measures including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share and billings. Excluding billings, these non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, restructuring charges, amortization of purchased intangibles, gain and loss on strategic investments, and related income tax expenses. In the case of billings, we reconcile to revenue by adjusting for the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period and other discounts. See our reconciliation of GAAP financial measures to non-GAAP financial measures herein. We believe these exclusions are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with our historical operating results. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of Autodesk's underlying operational results and trends and our marketplace performance. For example, non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for our planning and forecasting of future periods.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

The following table shows Autodesk's non-GAAP results reconciled to GAAP results included in this release.


	Three Months Ended April 30,
	2015			2014
	(Unaudited)

GAAP cost of license and other revenue	$	53.1		$	49.3
Stock-based compensation expense	(1.5		)	(0.9		)
Amortization of developed technology	(12.4		)	(11.8		)
Non-GAAP cost of license and other revenue	$	39.2		$	36.6

GAAP cost of subscription revenue	$	38.7		$	29.4
Stock-based compensation expense	(1.4		)	(0.8		)
Amortization of developed technology	(1.1		)	(1.2		)
Non-GAAP cost of subscription revenue	$	36.2		$	27.4

GAAP gross profit	$	554.7		$	513.8
Stock-based compensation expense	2.9			1.7
Amortization of developed technology	13.5			13.0
Non-GAAP gross profit	$	571.1		$	528.5

GAAP marketing and sales	$	253.9		$	225.4
Stock-based compensation expense	(21.7		)	(14.0		)
Non-GAAP marketing and sales	$	232.2		$	211.4

GAAP research and development	$	194.5		$	170.5
Stock-based compensation expense	(17.6		)	(10.9		)
Non-GAAP research and development	$	176.9		$	159.6

GAAP general and administrative	$	75.9		$	62.5
Stock-based compensation expense	(8.0		)	(7.0		)
Non-GAAP general and administrative	$	67.9		$	55.5

GAAP amortization of purchased intangibles	$	8.9		$	10.9
Amortization of purchased intangibles		(8.9	)		(10.9	)
Non-GAAP Amortization of purchased intangibles	$	—		$	—

GAAP restructuring charges, net	$	—		$	2.3
Restructuring charges, net	—			(2.3		)
Non-GAAP restructuring charges, net	$	—		$	—

GAAP operating expenses	$	533.2		$	471.6
Stock-based compensation expense	(47.3		)	(31.9		)
Amortization of purchased intangibles	(8.9		)	(10.9		)
Restructuring charges, net	—			(2.3		)
Non-GAAP operating expenses	$	477.0		$	426.5

GAAP income from operations	$	21.5		$	42.2
Stock-based compensation expense	50.2			33.6
Amortization of developed technology	13.5			13.0
Amortization of purchased intangibles	8.9			10.9
Restructuring charges, net	—			2.3
Non-GAAP income from operations	$	94.1		$	102.0

GAAP interest and other income, net	$	0.3		$	(6.6	)
(Gain) Loss on strategic investments	(1.0		)	3.6
Non-GAAP interest and other income, net	$	(0.7	)	$	(3.0	)

GAAP provision for income taxes	$	(2.7	)	$	(7.3	)
Discrete GAAP tax provision items	(3.1		)	(2.1		)
Income tax effect of non-GAAP adjustments	(18.5		)	(15.8		)
Non-GAAP provision for income tax	$	(24.3	)	$	(25.2	)

GAAP net income	$	19.1		$	28.3
Stock-based compensation expense	50.2			33.6
Amortization of developed technology	13.5			13.0
Amortization of purchased intangibles	8.9			10.9
Restructuring charges, net	—			2.3
(Gain) Loss on strategic investments	(1.0		)	3.6
Discrete GAAP tax provision items	(3.1		)	(2.1		)
Income tax effect of non-GAAP adjustments	(18.5		)	(15.8		)
Non-GAAP net income	$	69.1		$	73.8

GAAP diluted net income per share	$	0.08		$	0.12
Stock-based compensation expense	0.21			0.14
Amortization of developed technology	0.06			0.06
Amortization of purchased intangibles	0.04			0.05
Restructuring charges, net	—			0.01
Loss on strategic investments	—			0.02
Discrete GAAP tax provision items	(0.01		)	(0.01		)
Income tax effect of non-GAAP adjustments	(0.08		)	(0.07		)
Non-GAAP diluted net income per share	$	0.30		$	0.32


Autodesk, Inc.

Other Supplemental Financial Information (a)

Fiscal Year 2016	QTR 1			QTR 2		QTR 3	QTR 4	YTD 2016
Financial Statistics ($ in millions, except per share data):
Total Net Revenue:	$	647						$	647
License and Other Revenue	$	327						$	327
Subscription Revenue	$	320						$	320

GAAP Gross Margin	86		%					86		%
Non-GAAP Gross Margin (1)(2)	88		%					88		%

GAAP Operating Expenses	$	533						$	533
GAAP Operating Margin	3		%					3		%
GAAP Net Income	$	19						$	19
GAAP Diluted Net Income Per Share (b)	$	0.08						$	0.08

Non-GAAP Operating Expenses (1)(3)	$	477						$	477
Non-GAAP Operating Margin (1)(4)	15		%					15		%
Non-GAAP Net Income (1)(5)(c)	$	69						$	69
Non-GAAP Diluted Net Income Per Share (1)(6)(b)(c)	$	0.30						$	0.30

Total Cash and Marketable Securities	$	2,271						$	2,271
Days Sales Outstanding	44
Capital Expenditures	$	13						$	13
Cash Flow from Operating Activities	$	87						$	87
GAAP Depreciation, Amortization and Accretion	$	38						$	38

Deferred Subscription Revenue Balance (c)	$	930						$	930

Revenue by Geography:
Americas	$	244						$	244
Europe, Middle East and Africa	$	245						$	245
Asia Pacific	$	157						$	157
% of Total Rev from Emerging Economies	14		%					14		%

Revenue by Segment:
Architecture, Engineering and Construction	$	237						$	237
Platform Solutions and Emerging Business	$	185						$	185
Manufacturing	$	185						$	185
Media and Entertainment	$	40						$	40

Other Revenue Statistics:
% of Total Rev from Flagship	46		%					46		%
% of Total Rev from Suites	37		%					37		%
% of Total Rev from New and Adjacent	17		%					17		%
% of Total Rev from AutoCAD and AutoCAD LT	25		%					25		%

Favorable (Unfavorable) Impact of U.S. Dollar Translation Relative to Foreign Currencies Compared to Comparable Prior Year Period:
FX Impact on Billings	$	(31	)					$	(31	)
FX Impact on Total Net Revenue	$	(22	)					$	(22	)
FX Impact on Cost of Revenue and Total Operating Expenses	$	22						$	22
FX Impact on Operating Income	$	—						$	—

Gross Profit by Segment:
Architecture, Engineering and Construction	$	217						$	217
Platform Solutions and Emerging Business	$	163						$	163
Manufacturing	$	158						$	158
Media and Entertainment	$	33						$	33
Unallocated amounts	$	(16	)					$	(16	)

Common Stock Statistics:
Common Shares Outstanding	227.6							227.6
Fully Diluted Weighted Average Shares Outstanding	231.7							231.7
Shares Repurchased	1.6							1.6

Subscriptions (in millions):
Total Subscriptions (c)	2.33							2.33

(a) Totals may not agree with the sum of the components due to rounding.
(b) Earnings per share were computed independently for each of the periods presented; therefore the sum of the earnings per share amounts for the quarters may not equal the total for the year.
(c) Total Subscriptions consists of subscriptions from our maintenance, desktop, cloud service and enterprise license offerings that are active as of the quarter end date. For certain cloud based and enterprise license offerings, subscriptions represent the monthly average activity within the last three months of the quarter end date. Total subscriptions do not include data from education offerings, consumer product offerings, certain Creative Finishing product offerings, Autodesk Buzzsaw, Autodesk Constructware and third party products. Subscriptions acquired with the acquisition of a business are captured once the data conforms to our subscription count methodology and when added, may cause variability in the quarterly comparisons of this calculation.

(1) To supplement our consolidated financial statements presented on a GAAP basis, Autodesk provides investors with certain non-GAAP measures including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share and billings. Excluding net billings, these non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, restructuring charges, amortization of purchased intangibles, gain and loss on strategic investments, and related income tax expenses. In the case of billings, we reconcile to revenue by adjusting for the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period and other discounts. See our reconciliation of GAAP financial measures to non-GAAP financial measures herein. We believe these exclusions are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with our historical operating results. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of Autodesk's underlying operational results and trends and our marketplace performance. For example, non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for our planning and forecasting of future periods. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying Autodesk's press release.

	QTR 1			QTR 2		QTR 3	QTR 4	YTD 2016
(2) GAAP Gross Margin	86		%					86		%
Stock-based compensation expense	—		%					—		%
Amortization of developed technology	2		%					2		%
Non-GAAP Gross Margin	88		%					88		%

(3) GAAP Operating Expenses	$	533						$	533
Stock-based compensation expense	(47		)					(47		)
Amortization of purchased intangibles	(9		)					(9		)
Restructuring charges, net	—							—
Non-GAAP Operating Expenses	$	477						$	477

(4) GAAP Operating Margin	3		%					3		%
Stock-based compensation expense	8		%					8		%
Amortization of developed technology	2		%					2		%
Amortization of purchased intangibles	2		%					2		%
Restructuring charges, net	—		%					—		%
Non-GAAP Operating Margin	15		%					15		%

(5) GAAP Net Income	$	19						$	19
Stock-based compensation expense	50							50
Amortization of developed technology	14							14
Amortization of purchased intangibles	9							9
Restructuring charges, net	—							—
Loss on strategic investments	(1		)					(1		)
Discrete GAAP tax provision items	(3		)					(3		)
Income tax effect of non-GAAP adjustments	(19		)					(19		)
Non-GAAP Net Income	$	69						$	69

(6) GAAP Diluted Net Income Per Share	$	0.08						$	0.08
Stock-based compensation expense	0.21							0.21
Amortization of developed technology	0.06							0.06
Amortization of purchased intangibles	0.04							0.04
Restructuring charges, net	—							—
Loss on strategic investments	—							—
Discrete GAAP tax provision items	(0.01		)					(0.01		)
Income tax effect of non-GAAP adjustments	(0.08		)					(0.08		)
Non-GAAP Diluted Net Income Per Share	$	0.30						$	0.30

Reconciliation for Billings:
	Q116
Year over year change in GAAP Net Revenue	9		%
Change in deferred revenue in the current period	(11		)%
Change in hedge gain (loss) applicable to billings	4		%
Change in acquisition related deferred revenue and other	1		%
Year over year change in Billings	3		%

Reconciliation for Guidance:
The following is a reconciliation of anticipated full year fiscal 2016 GAAP and non-GAAP operating margins:
	Fiscal 2016
GAAP operating margin	1		%	3	%
Stock-based compensation expense	8		%	8	%
Amortization of purchased intangibles	3		%	3	%
Non-GAAP operating margin	12		%	14	%

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