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Autodesk Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: December 4, 2012 04:10PM

Autodesk Inc. (ADSK) filed Quarterly Report for the period ended 2012-10-31. Autodesk, Inc. has a market cap of $7.52 billion; its shares were traded at around $33.15 with a P/E ratio of 24.4 and P/S ratio of 3.4. Autodesk, Inc. had an annual average earning growth of 12.7% over the past 10 years.



Highlight of Business Operations:

Our income from operations decreased 62% in the three months ended October 31, 2012, compared to the same period in the prior fiscal year. Our total operating margin decreased as a percentage of revenue from 16% for the three months ended October 31, 2011 to 6% during the three months ended October 31, 2012. The decreases in our income from operations and our operating margin were impacted by a decline of less than 1% or $0.6 million in net revenue, while our operating expenses increased $56.9 million, or 14% for the three months ended October 31, 2012, as compared to the same period in the prior fiscal year. The 14% increase in operating expenses in the three months ended October 31, 2012, as compared to the three months ended October 31, 2011 was due primarily to recording $36.7 million in restructuring charges in the three months ended October 31, 2012 incurred as a result of our Fiscal 2013 Plan. During the third quarter of fiscal 2013, the Board of Directors of the Company approved a world-wide restructuring plan in line with the Company's strategy, including its continuing shift to cloud and mobile computing.

We generate a majority of our revenue in the U.S., Japan, Germany, France, and Canada. Our revenue was negatively impacted from foreign exchange rate changes during the three and nine months ended October 31, 2012, as compared to the same periods in the prior fiscal year. During the three and nine months ended October 31, 2012 net revenue declined slightly and increased 5%, respectively, compared to the same periods in the prior fiscal year; had applicable exchange rates from the three and nine months ended October 31, 2011 been in effect during the three and nine months ended October 31, 2012, and had we excluded foreign exchange hedge gains and losses from the three and nine months ended October 31, 2012 and 2011 (“on a constant currency basis”), net revenue would have increased 2% and 5% respectively, compared to the same periods in the prior fiscal year. During the three and nine months ended October 31, 2012, total spend, defined as cost of revenue plus operating expenses, increased 12% and 9%, respectively, compared to the same periods in the prior fiscal year as reported and increased 14% and 10%, respectively, on a constant currency basis. Changes in the value of the U.S. dollar may have a significant effect on net revenue, total spend and income from operations in future periods. We use foreign currency contracts to reduce the exchange rate effect on a portion of the net revenue of certain anticipated transactions, but do not attempt to completely mitigate the impact of fluctuation of such foreign currency against the U.S. dollar.

Revenue from flagship products was 54% and 56% of total net revenue during the three and nine months ended October 31, 2012, respectively, and decreased 4% and increased 2% during the three and nine months ended October 31, 2012, respectively, as compared to the same periods in the prior fiscal year. Revenue from suites was 30% and 29% of total net revenue during the three and nine months ended October 31, 2012, respectively, and increased 10% and 15% as compared to the same periods in the prior fiscal year, respectively. Revenue from new and adjacent products was 15% of total net revenue during both the three and nine months ended October 31, 2012 and decreased 3% and increased 1% as compared to the same periods in the prior fiscal year, respectively. We anticipate, as our new and existing customers migrate from our stand-alone products, that our revenue from suites will increase as a percentage of revenue, while our revenue from our flagship and new and adjacent products will decline as a percentage of revenue.

Net revenue in the EMEA geography decreased by 3%, or increased by 3% on a constant currency basis, during the three months ended October 31, 2012 as compared to the same period in the prior fiscal year. The decrease was primarily due to a 6% decrease in new seat revenue and a 29% decrease in upgrade revenue offset by a 1% increase in maintenance revenue in this geography during the three months ended October 31, 2012 as compared to the three months ended October 31, 2011. The decrease in our revenue in this geography was led by the United Kingdom, Sweden and France partially offset by an increase in revenue from Ireland and Finland. Net revenue in the EMEA geography increased less than 1%, or 2% on a constant currency basis, during the nine months ended October 31, 2012 as compared to the same period in the prior fiscal year. The 5% increase in maintenance revenue was offset by a 23% decrease in upgrade revenue in this geography during the nine months ended October 31, 2012 as compared to the nine months ended October 31, 2011. Increases in revenue in Ireland, Germany and Finland were offset by decreases in revenue from the United Kingdom, Sweden, and Poland.

During the three months ended October 31, 2012, net revenue for M&E decreased 9% as compared to the same period in the prior fiscal year, primarily due to a 10% decrease in revenue from Animation and 7% decrease in revenue from Creative Finishing. The decrease in Animation revenue was primarily due to a 21% decrease in revenue from our flagship product, 3Ds Max, and an 87% decrease in revenue from our animation suites, which includes our Autodesk Entertainment Creation Suite. The decline in Creative Finishing was marked by weakening demand across all geographic regions. During the nine months ended October 31, 2012, net revenue for M&E decreased 8% as compared to the same period in the prior fiscal year, primarily due to a 15% decrease in revenue from Creative Finishing and a 5% decrease in Animation product group. The decline in Creative Finishing was marked by weakening demand across all geographic regions. The decrease in Animation revenue was primarily due to a 19% decrease in revenue from our flagship product, 3Ds Max, and a 61% decrease in revenue from our animation suites, which includes our Autodesk Entertainment Creation Suite. As more of our customers move to our suites products, our revenue on stand-alone products like 3Ds Max may decrease because it is included in our suites. This move to our suites is part of our strategy and represents a growth opportunity for us over the long-term.

Read the The complete Report



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