Strong Upgrade Sales Lift Autodesk First Quarter Revenue 11%

The recovery of AutoCAD sales is outpacing all other divisions. Cash flow from operations is up 411% compared to a year earlier.

By Randall S. Newton

Of all the companies we cover, Autodesk (NASDAQ: ADSK) was hit the hardest by the financial meltdown of 2008-09; its products cover the broadest range of industries. So many analysts who cover technical software were looking to Autodesk’s first quarter results to see if there is recovery in more than the manufacturing sector. The results were mixed, and Autodesk’s manufacturing revenue was flat. If Autodesk is a mainstream indicator of financial recovery, the jury is still deliberating.

For the first quarter of fiscal 2011 (ending April 30, 2010), Autodesk reported revenue of $475 million, up 11% compared to a year earlier, but still down considerably from pre-recession levels. The last time, pre-recession, that revenue was less than $475 million was in the third quarter of Fiscal 2007, ending September 2006.

Compare first quarter revenue and net income for five years:

1Q 2011          1Q 2010     1Q 2009      1Q 2008       1Q 2007

Revenue $475m           $426m         $599m           $509m         $436m

$ 36.9m         ($32.1m)      $ 95m            $ 83m          $ 49m

Just how bad was the first quarter last year? Cash flow from operations in the first quarter is up 411% (to $139 million) from a year ago.

First quarter results included a one-time benefit of approximately $15 million in upgrade revenue related to a promotion that was run in advance of an increase in upgrade pricing. AutoCAD sales were impacted the most by this sales boost.

Net income for the quarter was $36.9 million, way up from a $32.1 million loss a year earlier.

Sales by Region

Revenue in the Americas decreased to $161 million, down 1% compared to the first quarter of fiscal 2010. The sour results in the Americas is largely attributed to a weak construction sector.

Revenue in Europe, Middle East, and Africa (EMEA) was $199 million, up 19% from a year earlier; on a constant currency basis it was up 10%.

Revenue in Asia Pacific was $115 million, up 21% compared to the first quarter of fiscal 2010, and up 15% on a constant currency basis.

Revenue from emerging economies was $68 million, up 16% compared to 1Q10 and up 13% on a constant currency basis. Revenue from emerging economies represented 14% of Autodesk total revenue in the quarter.

Revenue by Product Line

Combined revenue from Autodesk’s model-based design solutions (previously known as 3D model-based design) was $138 million, up 13% from a year ago.

Combined revenue from horizontal design products (such as AutoCAD or AutoCAD LT, previously known as the 2D horizontal segment) and vertical design products (such as AutoCAD Electrical, and previously known as 2D vertical) was $240 million, up 17% from a year ago.

Combined revenue from just AutoCAD and AutoCAD LT products increased 20% from 1Q10, aided by the rush to beat a price increase.

Media and Entertainment may be the smallest division at Autodesk by revenue, but it has clearly proven to be the most recession resistant. Note the comparisons below, as well as the chart at the end of the article comparing “design solutions” with “media and entertainment.”

Product Line       1Q 2011      4Q 2010     1Q 201

Platform $184m        $165m          $156m

AEC $137m        $108m          $ 94m

Mfg. $108m         $108m         $ 94m

Media $ 46m           $ 46m           $ 48m

Other Indicators
The impact on income from currency fluctuations in the quarter was a gain of $21 million, as both the British Pound and the Euro dropped considerably against the US Dollar during the quarter.

Autodesk now has 2,383,000 seats of software on maintenance.

Cash and investments on hand are now $1.2 billion, for a cash per share figure on April 30, 2010 of $5.40.

Autodesk is not ready to provide a forecast for all of this fiscal year, but is estimating net revenue for the second quarter to be in the range of $435 million to $460 million.

The Final Analysis

Three years ago, writing in CADCAMNet, I wondered if AutoCAD sales were about to peak. Not only have they not faded, they continue to be the heart and soul of Autodesk revenue. In the chart “Sales by division” below, compare the shape of the “platform” product line to the shape of every other line.

The continued resistance of Autodesk’s customer base to move to model-based products like Revit or Inventor has forced Autodesk to modernize the old beast. As shown at this year’s Manufacturing Division Press Day in February, there is a new synergy between all the model-based products and AutoCAD, including spiffy new technology both inherited from the former Alias design products. Autodesk is now taking the model-based products into new directions, including analysis and simulation, to make them more enticing to AutoCAD users. If Moldflow or Algor technology ever gets added to AutoCAD, then we will know Autodesk has thrown in the towel on achieving a mass exodus to model-based design.

Six charts follow.

Contributing Analyst L. Stephen Wolfe, P.E. contributed research for this article.

Autodesk Quarterly Net Income

Autodesk Quarterly Revenue by Business Segment
Autodesk Quarterly Revenue by Business Segment

Autodesk Cash and Securities

Autodesk Revenue Design Solutions vs. Media & Entertainment

Autodesk Manufacturing Division Revenue

Autodesk AEC Division Revenue