Autodesk First Quarter Results Driven by Strong Subscription

Autodesk First Quarter Results Driven by Strong Subscription Additions

About Autodesk

Autodesk helps people imagine, design and create a better world. Everyone--from design professionals, engineers and architects to digital artists, students and hobbyists--uses Autodesk software to unlock their creativity and solve important challenges. For more information visit autodesk.com or follow @autodesk.

Autodesk is a registered trademark of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product and service offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document.

Autodesk, Inc.
Condensed Consolidated Statements of Operations
(In millions, except per share data)

	Three Months Ended April 30,
	2016			2015
	(Unaudited)
Net revenue:
Subscription	$	326.0		$	319.8
License and other	185.9			326.7
Total net revenue	511.9			646.5
Cost of revenue:
Cost of subscription revenue	39.7			38.7
Cost of license and other revenue	52.8			53.1
Total cost of revenue	92.5			91.8
Gross profit	419.4			554.7
Operating expenses:
Marketing and sales	242.9			253.9
Research and development	195.5			194.5
General and administrative	75.8			75.9
Amortization of purchased intangibles	7.9			8.9
Restructuring charges and other facility exit costs, net	52.3			—
Total operating expenses	574.4			533.2
(Loss) income from operations	(155.0		)	21.5
Interest and other (expense) income, net	(3.6		)	0.3
(Loss) income before income taxes	(158.6		)	21.8
Provision for income taxes	(14.4		)	(2.7		)
Net (loss) income	$	(173.0	)	$	19.1
Basic net (loss) income per share	$	(0.77	)	$	0.08
Diluted net (loss) income per share	$	(0.77	)	$	0.08
Weighted average shares used in computing basic net (loss) income per share	224.4			227.2
Weighted average shares used in computing diluted net (loss) income per share	224.4			231.7

Autodesk, Inc.
Condensed Consolidated Balance Sheets
(In millions)

	April 30, 2016			January 31, 2016
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,223.4		$	1,353.0
Marketable securities	1,043.9			897.9
Accounts receivable, net	256.4			653.6
Prepaid expenses and other current assets	105.3			88.6
Total current assets	2,629.0			2,993.1
Marketable securities	538.9			532.3
Computer equipment, software, furniture and leasehold improvements, net	174.9			169.3
Developed technologies, net	70.0			70.8
Goodwill	1,580.5			1,535.0
Deferred income taxes, net	9.8			9.2
Other assets	202.5			205.6
Total assets	$	5,205.6		$	5,515.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	107.2		$	119.9
Accrued compensation	132.8			243.3
Accrued income taxes	25.1			29.4
Deferred revenue	1,091.8			1,068.9
Other accrued liabilities	117.6			129.5
Total current liabilities	1,474.5			1,591.0
Long term deferred revenue	431.9			450.3
Long term income taxes payable	153.8			161.4
Long term deferred income taxes	78.1			67.7
Long term notes payable, net	1,488.4			1,487.7
Other liabilities	143.0			137.6
Stockholders’ equity:
Preferred stock	—			—
Common stock and additional paid-in capital	1,865.6			1,821.5
Accumulated other comprehensive loss	(121.5		)	(121.1		)
Retained earnings	(308.2		)	(80.8		)
Total stockholders' equity	1,435.9			1,619.6
Total liabilities and stockholders' equity	$	5,205.6		$	5,515.3

Autodesk, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)

	Three Months Ended April 30,
	2016			2015
	(Unaudited)
Operating activities:
Net (loss) income	$	(173.0	)	$	19.1
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion	37.4			37.8
Stock-based compensation expense	56.9			50.2
Deferred income taxes	6.2			(5.3		)
Restructuring charges and other facility exit costs, net	52.3			—
Other operating activities	8.3			(3.5		)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	397.4			143.1
Prepaid expenses and other current assets	(14.9		)	(22.4		)
Accounts payable and accrued liabilities	(197.2		)	(110.8		)
Deferred revenue	4.1			(3.4		)
Accrued income taxes	(13.1		)	(18.3		)
Net cash provided by operating activities	164.4			86.5
Investing activities:
Purchases of marketable securities	(577.5		)	(485.2		)
Sales of marketable securities	107.6			97.5
Maturities of marketable securities	322.6			192.4
Capital expenditures	(22.3		)	(12.5		)
Acquisitions, net of cash acquired	(59.6		)	(34.5		)
Other investing activities	(1.0		)	(10.6		)
Net cash (used in) investing activities	(230.2		)	(252.9		)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs	51.2			57.2
Taxes paid related to net share settlement of equity awards	(18.3		)	(23.1		)
Repurchase and retirement of common stock	(100.1		)	(95.4		)
Net cash (used in) financing activities	(67.2		)	(61.3		)
Effect of exchange rate changes on cash and cash equivalents	3.4			(0.2		)
Net (decrease) in cash and cash equivalents	(129.6		)	(227.9		)
Cash and cash equivalents at beginning of the period	1,353.0			1,410.6
Cash and cash equivalents at end of the period	$	1,223.4		$	1,182.7

Autodesk, Inc.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(In millions, except per share data)

To supplement our consolidated financial statements presented on a GAAP basis, Autodesk provides investors with certain non-GAAP measures including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, and non-GAAP diluted shares used in per share calculation. These non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, restructuring charges and other facility exit costs, amortization of purchased intangibles, gain and loss on strategic investments, and related income tax expenses. See our reconciliation of GAAP financial measures to non-GAAP financial measures herein. We believe these exclusions are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with our historical operating results. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of Autodesk's underlying operational results and trends and our marketplace performance. For example, non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among the indicators management uses as a basis for our planning and forecasting of future periods.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

The following table shows Autodesk's non-GAAP results reconciled to GAAP results included in this release.


	Three Months Ended April 30,
	2016			2015
	(Unaudited)

GAAP cost of subscription revenue	$	39.7		$	38.7
Stock-based compensation expense	(1.7		)	(1.4		)
Amortization of developed technology	(0.3		)	(1.1		)
Non-GAAP cost of subscription revenue	$	37.7		$	36.2

GAAP cost of license and other revenue	$	52.8		$	53.1
Stock-based compensation expense	(1.8		)	(1.5		)
Amortization of developed technology	(10.6		)	(12.4		)
Non-GAAP cost of license and other revenue	$	40.4		$	39.2

GAAP gross profit	$	419.4		$	554.7
Stock-based compensation expense	3.5			2.9
Amortization of developed technology	10.9			13.5
Non-GAAP gross profit	$	433.8		$	571.1

GAAP marketing and sales	$	242.9		$	253.9
Stock-based compensation expense	(23.6		)	(21.7		)
Non-GAAP marketing and sales	$	219.3		$	232.2

GAAP research and development	$	195.5		$	194.5
Stock-based compensation expense	(20.9		)	(17.6		)
Non-GAAP research and development	$	174.6		$	176.9

GAAP general and administrative	$	75.8		$	75.9
Stock-based compensation expense	(8.9		)	(8.0		)
Non-GAAP general and administrative	$	66.9		$	67.9

GAAP amortization of purchased intangibles	$	7.9		$	8.9
Amortization of purchased intangibles	(7.9		)	(8.9		)
Non-GAAP amortization of purchased intangibles	$	—		$	—

GAAP restructuring charges and other facility exit costs, net	$	52.3		$	—
Restructuring charges and other facility exit costs, net	(52.3		)	—
Non-GAAP restructuring charges and other facility exit costs, net	$	—		$	—

GAAP operating expenses	$	574.4		$	533.2
Stock-based compensation expense	(53.4		)	(47.3		)
Amortization of purchased intangibles	(7.9		)	(8.9		)
Restructuring charges and other facility exit costs, net	(52.3		)	—
Non-GAAP operating expenses	$	460.8		$	477.0

GAAP (loss) income from operations	$	(155.0	)	$	21.5
Stock-based compensation expense	56.9			50.2
Amortization of developed technology	10.9			13.5
Amortization of purchased intangibles	7.9			8.9
Restructuring charges and other facility exit costs, net	52.3			—
Non-GAAP (loss) income from operations	$	(27.0	)	$	94.1

GAAP interest and other (expense) income, net	$	(3.6	)	$	0.3
Gain on strategic investments	(0.5		)	(1.0		)
Non-GAAP interest and other (expense), net	$	(4.1	)	$	(0.7	)

GAAP (provision) for income taxes	$	(14.4	)	$	(2.7	)
Discrete GAAP tax (provision) items	(1.9		)	(3.1		)
Income tax effect of non-GAAP adjustments	24.4			(18.5		)
Non-GAAP benefit (provision) for income tax	$	8.1		$	(24.3	)

GAAP net (loss) income	$	(173.0	)	$	19.1
Stock-based compensation expense	56.9			50.2
Amortization of developed technology	10.9			13.5
Amortization of purchased intangibles	7.9			8.9
Restructuring charges and other facility exit costs, net	52.3			—
(Gain) on strategic investments	(0.5		)	(1.0		)
Discrete GAAP tax benefit (provision) items	(1.9		)	(3.1		)
Income tax effect of non-GAAP adjustments	24.4			(18.5		)
Non-GAAP net (loss) income	$	(23.0	)	$	69.1

GAAP diluted net (loss) income per share	$	(0.77	)	$	0.08
Stock-based compensation expense	0.25			0.21
Amortization of developed technology	0.05			0.06
Amortization of purchased intangibles	0.04			0.04
Restructuring charges and other facility exit costs, net	0.23			—
(Gain) on strategic investments	—			—
Discrete GAAP tax (provision) items	(0.01		)	(0.01		)
Income tax effect of non-GAAP adjustments	0.11			(0.08		)
Non-GAAP diluted net (loss) income per share	$	(0.10	)	$	0.30

GAAP diluted shares used in per share calculation	224.4			231.7
Shares included in non-GAAP net income per share, but excluded from GAAP net loss per share as they would have been anti-dilutive	—			—
Non-GAAP diluted weighted average shares used in per share calculation	224.4			231.7

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