Accelerated Annualized Recurring Revenue (ARR) Growth Highlights Autodesk's Second Quarter Results
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SAN RAFAEL, Calif., August 23, 2018 /PRNewswire/ — Autodesk, Inc. (NASDAQ: ADSK) today announced its financial results for the second quarter of fiscal 2019.
### Second Quarter Fiscal 2019 Highlights:
- **Subscription Plan ARR**: $1.68 billion, representing a 115% increase year-over-year as reported and 111% on a constant currency basis. Under the previous revenue accounting standard (ASC 605), subscription plan ARR was $1.66 billion, growing by 112% year-over-year.
- **Total ARR**: $2.35 billion, reflecting a 28% increase compared to the second quarter last year as reported, and 27% on a constant currency basis. Under ASC 605, total ARR was $2.32 billion, showing a 27% increase year-over-year.
- **Subscription Plan Subscriptions**: Increased by 290,000 from the first quarter of fiscal 2019 to reach 2.86 million at the end of the second quarter. This growth was partly driven by 117,000 maintenance subscribers who converted to product subscriptions under the maintenance-to-subscription (M2S) program.
- **Total Subscriptions**: Grew by 119,000 from the first quarter of fiscal 2019 to reach 3.94 million at the end of the second quarter.
- **Deferred Revenue**: $1.80 billion, an increase of 1% compared to the second quarter last year. Total deferred revenue (including deferred revenue plus unbilled deferred revenue) was $2.21 billion, up approximately 20% compared to the second quarter last year. Under ASC 605, total deferred revenue was $2.28 billion, an increase of approximately 24% year-over-year.
- **Revenue**: $612 million, an increase of 22% compared to the second quarter last year as reported, and 21% on a constant currency basis. Under ASC 605, revenue was $611 million, reflecting a 22% increase year-over-year.
- **Billings**: $605 million, up 27% compared to the second quarter last year. Under ASC 605, billings were $592 million, increasing by 24% year-over-year.
- **Total GAAP Spend (Cost of Revenue + Operating Expenses)**: $636 million, an increase of 4% compared to the second quarter last year as reported, and 3% on a constant currency basis. Absent ASC 340-40, total GAAP spend was $626 million, rising by 3% year-over-year.
- **Total Non-GAAP Spend**: $556 million, an increase of 5% compared to the second quarter last year as reported, and 4% on a constant currency basis. Without ASC 340-40, total non-GAAP spend was $546 million, growing by 3% year-over-year.
- **GAAP Diluted Net Loss Per Share**: $(0.18), compared to a GAAP diluted net loss per share of $(0.66) in the second quarter last year. Under ASC 605 and absent ASC 340-40, GAAP diluted net loss per share was $(0.12).
- **Non-GAAP Diluted Earnings Per Share**: $0.19, compared to a non-GAAP diluted net loss per share of $(0.11) in the second quarter last year. Under ASC 605 and absent ASC 340-40, non-GAAP diluted net income per share was $0.23.
Andrew Anagnost, President and CEO of Autodesk, commented, "Strong customer demand and consistent execution across our business have accelerated growth in ARR and annualized revenue per subscription (ARPS). A superior user experience is driving new customers to choose Autodesk's subscription and cloud offerings, and we continue to see a steady migration of existing maintenance customers to subscription plans."
Scott Herren, Autodesk's CFO, added, "We delivered robust results across several key metrics including billings, revenue, total deferred revenue, and earnings. We also generated positive cash flow from operating activities and anticipate being cash flow positive for the entire fiscal year. We're pleased with our performance in the first half of the fiscal year and remain confident in our ability to deliver results for the remainder of the year."
### Second Quarter Operational Overview:
Subscription plan ARR was $1.68 billion, representing a 115% increase year-over-year as reported and 111% on a constant currency basis. This figure includes $342 million related to the maintenance-to-subscription program. Maintenance plan ARR was $666 million, down 36% year-over-year as reported and on a constant currency basis. Total ARR was $2.35 billion, growing by 28% compared to the second quarter last year as reported, and 27% on a constant currency basis.
Subscription plan subscriptions (including product, enterprise business agreements, and cloud) reached 2.86 million, an increase of 290,000 from the first quarter of fiscal 2019. This growth was primarily driven by new product subscriptions and 117,000 product subscriptions that migrated from maintenance plan subscriptions. Maintenance plan subscriptions decreased by 172,000 from the first quarter of fiscal 2019, which included the 117,000 that migrated to product subscription. Total subscriptions stood at 3.94 million, an increase of 119,000 from the first quarter of fiscal 2019.
Total recurring revenue in the second quarter accounted for 96% of total revenue, compared to 91% of total revenue in the second quarter last year.
Revenue in the Americas was $248 million, an increase of 16% compared to the second quarter last year as reported, and 15% on a constant currency basis. Under ASC 605, revenue in the Americas was $249 million, growing by 16% year-over-year. Revenue in EMEA was $248 million, increasing by 25% compared to the second quarter last year as reported, and 22% on a constant currency basis. Under ASC 605, revenue in EMEA was $246 million, growing by 24% year-over-year. Revenue in APAC was $116 million, increasing by 31% compared to the second quarter last year as reported, and 30% on a constant currency basis. Under ASC 605, revenue in APAC was $115 million, growing by 30% year-over-year.
### Business Outlook:
The following are forward-looking statements based on current expectations and assumptions, involving risks and uncertainties outlined below under "Safe Harbor Statement." Autodesk's business outlook for the third quarter and full fiscal year 2019 assumes ongoing economic and foreign exchange environments. A reconciliation between the fiscal 2019 GAAP and non-GAAP estimates is provided below or in the tables following this press release.
Starting in the first quarter of fiscal 2019, Autodesk reports its results under two new accounting standards: Revenue is now reported under Accounting Standard Codification ("ASC") 606, and sales commissions are reported under ASC 340-40. We did not recast historical information, using the modified retrospective transition method. These new standards did not result in a change in the timing or amount of revenue recognized for the majority of our maintenance and subscription offerings, although there may be minor shifts in the timing of revenue recognition due to the elimination of VSOE requirements and other differences between the standards. However, we are now required to capitalize and amortize sales commissions under the new standards. ASC 606 and ASC 340-40 do not affect cash flows or subscriptions.
For the third quarter and full fiscal year 2019 outlook, we assume a projected annual effective tax rate of (117)% for GAAP and 19% for non-GAAP results. Assumptions for the annual effective tax rate are regularly evaluated and may change based on the projected geographic mix of earnings. At this stage of the business model transition, small shifts in geographic profitability significantly impact the annual effective tax rate.
For additional details on key terms and metrics, please refer to the Glossary of Terms later in this document.
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This press release contains forward-looking statements that involve risks and uncertainties, including but not limited to those outlined under "Safe Harbor Statement" above. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, such as failure to achieve revenue and profitability objectives, challenges in transitioning to new business models and markets, difficulty in managing expenses, success of restructuring activities, unpredictability in predicting revenue from new businesses, and fluctuation in foreign currency exchange rates. Further information on potential risk factors is included in Autodesk's Annual Report on Form 10-K for the fiscal year ended January 31, 2018, and Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2018, both filed with the U.S. Securities and Exchange Commission. Autodesk disclaims any obligation to update forward-looking statements to reflect events occurring or circumstances existing after the date on which they were made.
About Autodesk:
Autodesk creates software for people who make things. Whether it’s driving a high-performance car, admiring a towering skyscraper, using a smartphone, or watching a great film, chances are you’ve experienced what millions of Autodesk customers are doing with our software. Autodesk empowers creators to make anything. For more information, visit autodesk.com or follow @autodesk.
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