SAN FRANCISCO, Aug. 25, 2021 /PRNewswire/ — Autodesk, Inc. (NASDAQ: ADSK) today announced its financial results for the second quarter of fiscal 2022.
[Image: PRNewsfoto/Autodesk, Inc.]
All growth rates are compared to the second quarter of fiscal 2021, unless otherwise noted. A reconciliation of GAAP to non-GAAP results is provided in the accompanying tables. For definitions, please view the Glossary of Terms later in this document.
**Second Quarter Fiscal 2022 Financial Highlights**
- Total revenue increased 16 percent to $1,060 million.
- GAAP operating margin was 14 percent, down 2 percentage points.
- Non-GAAP operating margin was up 2 percentage points to 31 percent.
- GAAP diluted EPS was $0.52; Non-GAAP diluted EPS was $1.21.
- Cash flow from operating activities was $202 million; free cash flow was $186 million.
"Sustained and purposeful innovation to enable digital transformation in the industries we serve is changing our relationship with our customers from software vendor to strategic partner," said Andrew Anagnost, Autodesk president and CEO. "And that is enabling us to create more value through end-to-end, cloud-based solutions that connect data and workflows, and power business model evolution. By helping our customers grow, we will grow too, giving us confidence in our FY 23 goals and beyond."
"Robust growth in new product subscriptions, accelerating digital sales, and improving subscription renewal rates drove our strong second quarter results," said Debbie Clifford, Autodesk CFO. "Our strong start to the year means we are raising our FY22 revenue and margin guidance and shifting more of our EBA customers from multi-year paid up front to annual billings, benefiting both our customers and Autodesk."
**Additional Financial Details**
- Total billings increased 29 percent to $1,015 million.
- Total revenue was $1,060 million, an increase of 16 percent as reported, and 14 percent on a constant currency basis. Recurring revenue represents 98 percent of total.
- Design revenue was $944 million, an increase of 15 percent as reported, and 13 percent on a constant currency basis. On a sequential basis, Design revenue increased 7 percent as reported, and 6 percent on a constant currency basis.
- Make revenue was $90 million, an increase of 26 percent as reported, and 25 percent on a constant currency basis. On a sequential basis, Make revenue increased 10 percent as reported, and 9 percent on a constant currency basis.
- Subscription plan revenue was $1,017 million, an increase of 21 percent as reported, and 19 percent on a constant currency basis. On a sequential basis, subscription plan revenue increased 7 percent as reported and on a constant currency basis.
- Maintenance plan revenue was $17 million, a decrease of 67 percent as reported and on a constant currency basis. On a sequential basis, maintenance plan revenue decreased 12 percent as reported, and 13 percent on a constant currency basis.
- Net revenue retention rate was within the range of 100 to 110 percent.
- GAAP operating income was $148 million, compared to $146 million in the second quarter last year. GAAP operating margin was 14 percent, down 2 percentage points.
- Total non-GAAP operating income was $331 million, compared to $262 million in the second quarter last year. Non-GAAP operating margin was 31 percent, up 2 percentage points compared to the second quarter last year.
- GAAP diluted net income per share was $0.52, compared to $0.44 in the second quarter last year.
- Non-GAAP diluted net income per share was $1.21, compared to $0.98 in the second quarter last year.
- Deferred revenue increased 15 percent to $3.30 billion. Unbilled deferred revenue was $843 million, an increase of $375 million compared to the second quarter of last year. Remaining performance obligations (RPO) increased 24 percent to $4.14 billion. Current RPO increased 24 percent to $2.85 billion.
- Cash flow from operating activities was $202 million, an increase of $111 million compared to the second quarter last year. Free cash flow was $186 million, an increase of $122 million compared to the second quarter last year.
**Net Revenue by Geographic Area**
| Net Revenue: | Americas | U.S. | Other Americas | Total Americas | EMEA | APAC | Total Net Revenue |
|-------------|----------|------|----------------|----------------|------|------|-------------------|
| Three Months Ended July 31, 2021 | $422.8 | $347.3 | $75.5 | $422.8 | $410.2 | $226.7 | $1,059.7 |
| Three Months Ended July 31, 2020 | $371.5 | $309.5 | $62.0 | $371.5 | $354.7 | $186.9 | $913.1 |
| Change compared to prior fiscal year | $51.3 | $37.8 | $13.5 | $51.3 | $55.5 | $39.8 | $146.6 |
| Constant currency change compared to prior fiscal year | 14% | 12% | 22% | 14% | 16% | 21% | 14% |
**Net Revenue by Product Family**
| Product Family | Three Months Ended July 31, 2021 | Three Months Ended July 31, 2020 | Change compared to prior fiscal year | Constant currency change compared to prior fiscal year |
|---------------|----------------------------------|----------------------------------|-------------------------------------|--------------------------------------------------------|
| AEC | $478.7 | $397.0 | $81.7 | 21% |
| AutoCAD and AutoCAD LT | $304.4 | $271.9 | $32.5 | 12% |
| MFG | $207.7 | $185.5 | $22.2 | 12% |
| M&E | $58.5 | $53.3 | $5.2 | 10% |
| Other | $10.4 | $5.4 | $5.0 | 93% |
| Total | $1,059.7 | $913.1 | $146.6 | 16% |
**Business Outlook**
Autodesk's business outlook for the third quarter and full-year fiscal 2022 takes into consideration the current economic environment and foreign exchange currency rate environment. A reconciliation between the fiscal 2022 GAAP and non-GAAP estimates is provided below or in the tables following this press release.
**Third Quarter Fiscal 2022 Guidance Metrics**
- Revenue (in millions): $1,110 – $1,125
- EPS GAAP: $0.50 – $0.56
- EPS non-GAAP (1): $1.22 – $1.28
**Full Year Fiscal 2022 Guidance Metrics**
- Billings (in millions) (1): $4,875 – $4,975 (Up 18% – 20%)
- Revenue (in millions) (2): $4,345 – $4,385 (Up 15% – 16%)
- GAAP operating margin: Approx. 15%
- Non-GAAP operating margin (3): Approx. 31%
- EPS GAAP: $2.43 – $2.58
- EPS non-GAAP (4): $4.91 – $5.06
- Free cash flow (in millions) (5): $1,500 – $1,575
The third quarter and full-year fiscal 2022 outlook assume a projected annual effective tax rate of 16 percent for GAAP and non-GAAP results, respectively. Shifts in geographic profitability continue to impact the annual effective tax rate due to significant differences in tax rates in various jurisdictions. Therefore, assumptions for the annual effective tax rate are evaluated regularly and may change based on the projected geographic mix of earnings.
**Earnings Conference Call and Webcast**
Autodesk will host its second quarter conference call today at 5 p.m. ET. The live broadcast can be accessed at autodesk.com/investor. A transcript of the opening commentary will also be available following the conference call. A replay of the broadcast will be available at 7 p.m. ET at autodesk.com/investor. This replay will be maintained on Autodesk’s website for at least 12 months.
**Investor Presentation Details**
An investor presentation, excel financials and other supplemental materials providing additional information can be found at autodesk.com/investor.
To help better understand our financial performance, we use several key performance metrics including billings, recurring revenue and net revenue retention rate ("NR3"). These metrics are key performance metrics and should be viewed independently of revenue and deferred revenue. These metrics are not intended to be combined with those items. We use these metrics to monitor the strength of our recurring business. We believe these metrics are useful to investors because they can help in monitoring the long-term health of our business. Our determination and presentation of these metrics may differ from that of other companies. The presentation of these metrics is meant to be considered in addition to, not as a substitute for or in isolation from, our financial measures prepared in accordance with GAAP.
**Glossary of Terms**
- **Billings:** Total revenue plus the net change in deferred revenue from the beginning to the end of the period.
- **Cloud Service Offerings:** Represents individual term-based offerings deployed through web browser technologies or in a hybrid software and cloud configuration. Cloud service offerings that are bundled with other product offerings are not captured as a separate cloud service offering.
- **Constant Currency (CC) Growth Rates:** We attempt to represent the changes in the underlying business operations by eliminating fluctuations caused by changes in foreign currency exchange rates as well as eliminating hedge gains or losses recorded within the current and comparative periods. We calculate constant currency growth rates by (i) applying the applicable prior period exchange rates to current period results and (ii) excluding any gains or losses from foreign currency hedge contracts that are reported in the current and comparative periods.
- **Design Business:** Represents the combination of maintenance, product subscriptions, and all EBAs. Main products include, but are not limited to, AutoCAD, AutoCAD LT, Industry Collections, Revit, Inventor, Maya and 3ds Max. Certain products, such as our computer aided manufacturing solutions, incorporate both Design and Make functionality and are classified as Design.
- **Enterprise Business Agreements (EBAs):** Represents programs providing enterprise customers with token-based access to a broad pool of Autodesk products over a defined contract term.
- **Free Cash Flow:** Cash flow from operating activities minus capital expenditures.
- **Industry Collections:** Autodesk Industry Collections are a combination of products and services that target a specific user objective and support a set of workflows for that objective. Our Industry Collections consist of: Autodesk Architecture, Engineering and Construction Collection, Autodesk Product Design & Manufacturing Collection, and Autodesk Media and Entertainment Collection.
- **Maintenance Plan:** Our maintenance plans provide our customers with a cost effective and predictable budgetary option to obtain the productivity benefits of our new releases and enhancements when and if released during the term of their contracts. Under our maintenance plans, customers are eligible to receive unspecified upgrades when and if available, and technical support. We recognize maintenance revenue over the term of the agreements, generally one year.
- **Make Business:** Represents certain cloud-based product subscriptions. Main products include, but are not limited to, Assemble, Autodesk Build, BuildingConnected, Fusion 360 and Shotgrid. Certain products, such as Fusion 360, incorporate both Design and Make functionality and are classified as Make.
- **Net Revenue Retention Rate (NR3):** Measures the year-over-year change in subscription and maintenance revenue for the population of customers that existed one year ago ("base customers"). Net revenue retention rate is calculated by dividing the current quarter subscription and maintenance revenue related to base customers by the total corresponding quarter subscription and maintenance revenue from one year ago. Subscription and maintenance revenue is based on USD reported revenue, and fluctuations caused by changes in foreign currency exchange rates and hedge gains or losses have not been eliminated. Subscription and maintenance revenue related to acquired companies, one year after acquisition, has been captured as existing customers until such data conforms to the calculation methodology. This may cause variability in the comparison.
- **Other Revenue:** Consists of revenue from consulting, training, and other products and services, and is recognized as the products are delivered and services are performed.
- **Product Subscription:** Provides customers a flexible, cost-effective way to access and manage 3D design, engineering, and entertainment software tools. Our product subscriptions currently represent a hybrid of desktop and cloud functionality, which provides a device-independent, collaborative design workflow for designers and their stakeholders.
- **Recurring Revenue:** Consists of the revenue for the period from our traditional maintenance plans and revenue from our subscription plan offerings. It excludes subscription revenue related to consumer product offerings, select Creative Finishing product offerings, and third-party products. Recurring revenue acquired with the acquisition of a business is captured when total subscriptions are captured in our systems and may cause variability in the comparison of this calculation.
- **Remaining Performance Obligations (RPO):** The sum of total short-term, long-term, and unbilled deferred revenue. Current remaining performance obligations is the amount of revenue we expect to recognize in the next twelve months.
- **Spend:** The sum of cost of revenue and operating expenses.
- **Subscription Plan:** Comprises our term-based product subscriptions, cloud service offerings, and EBAs. Subscriptions represent a combined hybrid offering of desktop software and cloud functionality which provides a device-independent, collaborative design workflow for designers and their stakeholders. With subscription, customers can use our software anytime, anywhere, and get access to the latest updates to previous versions.
- **Subscription Revenue:** Includes our term-based product subscriptions, cloud service offerings, and flexible EBAs.
- **Unbilled Deferred Revenue:** Unbilled deferred revenue represents contractually stated or committed orders under early renewal and multi-year billing plans for subscription, services, and maintenance for which the associated deferred revenue has not been recognized. Under FASB Accounting Standards Codification ("ASC") Topic 606, unbilled deferred revenue is not included as a receivable or deferred revenue on our Condensed Consolidated Balance Sheet.
**Safe Harbor Statement**
This press release contains forward-looking statements that involve risks and uncertainties, including quotations from management, statements in the paragraphs under "Business Outlook" above statements about our short-term and long-term goals, statements regarding our strategies, market and product positions, performance and results, and all statements that are not historical facts. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: our strategy to develop and introduce new products and services, exposing us to risks such as limited customer acceptance, costs related to product defects, and large expenditures; the effects of the COVID-19 pandemic and related public health measures; global economic and political conditions; costs and challenges associated with strategic acquisitions and investments; dependency on international revenue and operations, exposing us to significant international regulatory, economic, intellectual property, collections, currency exchange rate, taxation, political, and other risks; inability to predict subscription renewal rates and their impact on our future revenue and operating results; existing and increased competition and rapidly evolving technological changes; fluctuation of our financial results, key metrics and other operating metrics; deriving a substantial portion of our net revenue from a small number of solutions, including our AutoCAD-based software products and collections; any failure to successfully execute and manage initiatives to realign or introduce new business and sales initiatives; net revenue, billings, earnings, cash flow, or subscriptions shortfalls; social and ethical issues relating to the use of artificial intelligence in our offerings; security incidents or other incidents compromising the integrity of our or our customers’ offerings, services, data, or intellectual property; reliance on third parties to provide us with a number of operational and technical services as well as software; our highly complex software, which may contain undetected errors, defects, or vulnerabilities; increasing regulatory focus on privacy issues and expanding laws; governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls; protection of our intellectual property rights and intellectual property infringement claims from others; the government procurement process; fluctuations in currency exchange rates; our debt service obligations; and our investment portfolio consisting of a variety of investment vehicles that are subject to interest rate trends, market volatility, and other economic factors. Our estimates as to tax rate are based on current tax law, including current interpretations of the Tax Cuts and Jobs Act, and could be affected by changing interpretations of that Act, as well as additional legislation and guidance around that Act.
Further information on potential factors that could affect the financial results of Autodesk are included in Autodesk’s Form 10-K and subsequent forms 10-Q, which are on file with the U.S. Securities and Exchange Commission. Autodesk disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
**About Autodesk**
Autodesk makes software for people who make things. If you’ve ever driven a high-performance car, admired a towering skyscraper, used a smartphone, or watched a great film, chances are you’ve experienced what millions of Autodesk customers are doing with our software. Autodesk gives you the power to make anything. For more information, visit autodesk.com or follow @autodesk.
Autodesk uses its investors.autodesk.com website as a means of disclosing material non-public information, announcing upcoming investor conferences and for complying with its disclosure obligations under Regulation FD. Accordingly, you should monitor our investor relations website in addition to following our press releases, SEC filings and public conference calls and webcasts.
**Autodesk, Inc.**
**Condensed Consolidated Statements of Operations**
| Net revenue: | Subscription | Maintenance | Total subscription and maintenance revenue | Other | Total net revenue |
|-------------|--------------|-------------|-------------------------------------------|-------|-------------------|
| Three Months Ended July 31, 2021 | $1,016.7 | $16.9 | $1,033.6 | $26.1 | $1,059.7 |
| Three Months Ended July 31, 2020 | $841.2 | $51.2 | $892.4 | $20.7 | $913.1 |
| Change compared to prior fiscal year | $175.5 | ($34.3) | $141.2 | $5.4 | $146.6 |
| Constant currency change compared to prior fiscal year | 21% | (67%) | 16% | 26% | 16% |
**Condensed Consolidated Balance Sheets**
| Assets | July 31, 2021 | January 31, 2021 |
|--------|---------------|------------------|
| Cash and cash equivalents | $923.5 | $1,772.2 |
| Marketable securities | $1.4 | $4.0 |
| Accounts receivable, net | $357.8 | $643.1 |
| Prepaid expenses and other current assets | $263.3 | $206.2 |
| Total current assets | $1,546.0 | $2,625.5 |
| Computer equipment, software, furniture and leasehold improvements, net | $198.3 | $192.8 |
| Operating lease right-of-use assets | $384.3 | $416.7 |
| Intangible assets, net (1) | $511.3 | $199.3 |
| Goodwill | $3,562.2 | $2,706.5 |
| Deferred income taxes, net | $739.6 | $763.1 |
| Long-term other assets (1) | $478.9 | $375.9 |
| Total assets | $7,420.6 | $7,279.8 |
| Liabilities and Stockholders’ Equity | July 31, 2021 | January 31, 2021 |
|------------------------------------|---------------|------------------|
| Accounts payable | $108.4 | $122.5 |
| Accrued compensation | $216.5 | $322.6 |
| Accrued income taxes | $21.9 | $42.6 |
| Deferred revenue | $2,521.0 | $2,500.9 |
| Operating lease liabilities | $87.7 | $71.4 |
| Other accrued liabilities | $131.9 | $194.7 |
| Total current liabilities | $3,087.4 | $3,254.7 |
| Long-term deferred revenue | $779.4 | $859.3 |
| Long-term operating lease liabilities | $358.9 | $396.0 |
| Long-term income taxes payable | $21.1 | $15.9 |
| Long-term deferred income taxes | $60.4 | $53.1 |
| Total liabilities | $4,307.1 | $4,520.0 |
| Stockholders’ equity | $3,113.5 | $2,759.8 |
| Total liabilities and stockholders’ equity | $7,420.6 | $7,279.8 |
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