Autodesk Inc. Reports Operating Results (10-Q)
Autodesk Inc. has a market cap of $6.87 billion; its shares were traded at around $29.98 with a P/E ratio of 41 and P/S ratio of 4. Autodesk Inc. had an annual average earning growth of 9.2% over the past 10 years.ADSK is in the portfolios of Richard Aster Jr of Meridian Fund, Manning & Napier Advisors, Inc, Andreas Halvorsen of Viking Global Investors LP, Steve Mandel of Lone Pine Capital, Steven Cohen of SAC Capital Advisors, Dodge & Cox, John Hussman of Hussman Economtrics Advisors, Inc., Bruce Kovner of Caxton Associates, Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations: Product Returns Reserves. We permit our distributors and resellers to return products up to a percentage of prior quarter purchases. The product returns reserve is based on historical experience of actual product returns, estimated channel inventory levels, the timing of new product introductions and promotions, channel sell-in for applicable markets and other factors. Our product returns reserves were $10.9 million at April 30, 2010 and $11.8 million at January 31, 2010. Product returns as a percentage of applicable revenue were 5.5% for the three months ended April 30, 2010 and 2009. During the three months ended April 30, 2010 and 2009, we recorded additions to our product returns reserve of $11.0 million and $12.4 million, respectively, which reduced our revenue.
During the three months ended April 30, 2010, as compared to the same period of the prior fiscal year, net revenue increased $48.8 million, gross profit increased $49.8 million and income from operations increased $70.2 million. The $70.2 million increase in income from operations during the quarter ended April 30, 2010, as compared to the same period in the prior fiscal year, was due to the $48.8 million increase in our net revenue and the $21.4 decrease in total spend, defined as cost of revenue plus operating expenses. The majority of our costs are relatively fixed in the short term as they relate primarily to our workforce. In an attempt to adjust our cost structure, we initiated restructuring plans that resulted in us recording restructuring charges of $7.1 million and $16.5 million during the three months ended April 30, 2010 and 2009, respectively. In addition, during the three months ended April 30, 2009 we recorded a goodwill impairment charge of $21.0 million associated with our M&E segment. The favorable impacts of the
Our total spend decreased by $21.4 million, or 5%, during the three months ended April 30, 2010 as compared to the same period of the prior fiscal year. While the magnitude of this savings is modest, we also continued to invest in areas important to the future success of Autodesk. Our total spend of $423.8 million for the first quarter of fiscal 2011 included $24.3 million of stock-based compensation expenses, $7.7 million attributable to amortization of developed technology for acquisitions subsequent to December 2005, $7.1 million for restructuring charges and $6.2 million attributable to amortization of customer relationships and trade names for acquisitions subsequent to December 2005.
Our total operating margin increased from a loss of $19.4 million, or negative 5%, during the three months ended April 30, 2009, to income of $50.8 million, or 11%, during the three months ended April 30, 2010. The increase in our operating margin during the three months ended April 30, 2010 was primarily due net revenue increasing more rapidly than the increase in our costs due to our cost saving initiatives during fiscal 2010 and 2011. Also contributing to the increase in total operating margin were the decreases in goodwill impairment and restructuring charges during the three months ended April 30, 2010 as compared to the same period of the prior fiscal year. Our operating margin increased $21.0 million due to the decrease in goodwill impairment charges and $9.4 million for the decrease in restructuring charges. These decreases were partially offset by an increase in expenses due to the return of some previously suppressed costs and costs associated with higher revenue.
At April 30, 2010, we had $1,239.3 million in cash and marketable securities. We completed the quarter ended April 30, 2010 with a higher deferred revenue balance and a lower accounts receivable balance as compared to the quarter ended January 31, 2010. Our deferred revenue balance at April 30, 2010 included $491.7 million of customer maintenance contracts, which will be recognized as revenue ratably over the life of the contracts, which is predominantly one year. We repurchased 2.0 million shares of our common stock for $58.8 million during the three months ended April 30, 2010. Comparatively, we had no repurchases of our common stock during the three months ended April 30, 2009.
Aggregate backlog at April 30, 2010 and January 31, 2010 was $565.3 million and $542.5 million, respectively, of which $543.7 million and $516.5 million, respectively, represented deferred revenue. Backlog related to current software license product orders that had not shipped at the end of the quarter decreased by $4.4 million during the first quarter of fiscal 2011 from $26.0 million at January 31, 2010 to $21.6 million at April 30, 2010. Deferred revenue consists primarily of deferred maintenance revenue. To a lesser extent, deferred revenue consists of deferred license and other revenue derived from collaborative project management services, consulting services and deferred license sales. Backlog from current software license product orders that we have not yet shipped consists of orders for currently available licensed software products from customers with approved credit status and may include orders with current ship dates and orders with ship dates beyond the current fiscal period.
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