R&D spending is up as a percentage of sales, as Autodesk prepares to launch a new PLM product at the end of the month. Autodesk spent $90 million on 10 acquisitions during the quarter.
Autodesk (NASDAQ: ADSK) has reported a strong third quarter, with revenue up 15% compared to the year-earlier quarter, to $549 million. During the quarter Autodesk spent $90 million acquiring all or part of 10 companies. Autodesk said business was good in all geographic regions and product segments, driven by increased adoption of its new suites.
Current growth tracks closely with most of Autodesk’s competitors; the SolidWorks division of Dassault Systemes is up 16%, PTC revenue for desktop solutions is up 19%. The 30% growth in PTC’s “enterprise solutions” business—primarily Windchill PLM—underscores why Autodesk will be announcing a new PLM product in two weeks at Autodesk University.
For the third quarter of Autodesk’s fiscal year 2012 (ending October 31, 2011), Autodesk results by region:
- EMEA revenue was $202 million, up 10% from 3Q11; up 8% in constant currencies;
- Americas revenue was $200 million, up 12% from 3Q11.
- Asia/Pacific revenue was $146 million, up 28% from 3Q11; up 19% in constant currencies.
Revenue from “emerging economies” was $87 million, up 15% from 3Q11; up 11% in constant currencies. Revenue from emerging economies represented 16% of total revenue in the quarter. This percentage has started to trend down in recent quarters as results from mature economies improve.
Results by divisions and product segments:
- Platform Solutions and Emerging Business revenue was $210 million, up 21% from 3Q11;
- AEC revenue was $152 million, up 12% over 3Q11;
- Manufacturing revenue was $134 million, up 14% over 3Q11;
- Media and Entertainment revenue was $53 million, up 6% over 3Q11. M&E has consistently been showing flat or single-digit revenue growth since before the recession.
AutoCAD sales were $170 million during the quarter, representing 31% of company revenue.
Total license revenue (new sales) in the quarter was $331 million, while maintenance revenue (subscriptions) was $217 million.
Net income for the third quarter was $72.8 million, up 16% from a year earlier.
During the quarter Autodesk acquired all or part of 10 small companies, for a total of $90 million. Autodesk CEO Carl Bass said the acquisitions were important because they drive the company’s “platform technology transition” toward a cloud-based engineering environment. During a question-and-answer session with Wall Street analysts yesterday, Bass said he was surprised by the amount of enthusiasm the company is discovering for its new PLM product, to be unveiled at Autodesk University in two weeks, especially from large companies. He said the new cloud-based PLM offering will impact the product development market and the existing PLM vendors the way Salesforce.com’s entry into Customer Relations Management affected Siebel Systems (now part of Oracle) and the larger CRM industry.
In addition to acquisitions, Autodesk has steadily increased its research and development budget. In fiscal year 2011, which ended Jan. 31, 2011, Autodesk spent $496.2 million on R&D, which was 25.4% of net sales. In the 12 months ending in July 31, 2011, the R&D spend was $525.5 million, or 26.7% of net sales.
Cash per share on October 31, 2011 was $5.87, down from $6.72 three months ago. This drop in cash per share reverses an upward trend going back six quarters. Spending on acquisitions and increased R&D are the most obvious reasons for the change.
Six of our custom charts follow.
L. Stephen Wolfe, P.E., a contributing analyst for Jon Peddie Research, supplied research for this article.