Autodesk Given Buy Rating at RBC Capital (ADSK)

31 Aug 2015 | Author: | No comments yet »

Autodesk Halted, Drops 7%: FYQ3 Outlook Misses by a Mile on Subscription Shift.

The SeeControl service helps manufacturers and systems integrators connect, analyse, control, and manage remote products, things, and assets and create new service revenue opportunities.Shares of design software maker Autodesk (ADSK) were halted this afternoon just before the company reported fiscal Q2 revenue that slightly missed expectations, and forecast this quarter’s results much lower than consensus, citing a shift from traditional software licenses to subscriptions. Autodesk said it intends to continue to sell and support the SeeControl platform and to incorporate the technology into design solutions for the manufacturing and building industries. ADSK, -4.96% has signed an agreement to acquire SeeControl, a San Francisco-based developer of an enterprise Internet of Things (IoT) cloud service platform.

We welcome the SeeControl team and ecosystem to Autodesk,” said Amar Hanspal, Autodesk Senior Vice President for Information Modeling and Platform Products. Looking at the second half of this fiscal year we are maintaining our billings and subscriptions outlook but we’re now expecting a greater portion of our sales to shift from perpetual licenses to new subscription types. Autodesk also plans to develop a new IoT solution based on the SeeControl technology that will allow companies to gain real world insights of how their products perform, enabling customers to explore innovative new service models. Terms were not disclosed. “SolarCity has able to conceive and prototype new product ideas faster with SeeControl’s point-and-click toolset, and we’re excited to see how Autodesk will further develop the platform and integrate the technology,” said Ryan Hanley, Senior Director of Grid Engineering Solutions, SolarCity.

For the past two years we’ve been preparing for this transition and we’re now ready to accelerate the process.” As a reminder, Autodesk is undergoing a business model transition in which the company will discontinue selling new perpetual licenses in favor of subscriptions and flexible license arrangements. During the transition, billings, revenue, gross margin, operating margin, EPS, deferred revenue, and cash flow from operations will be impacted as more revenue is recognized ratably rather than up front and as new offerings bring a wider variety of price points.

Further information on potential factors that could affect the financial results of Autodesk are included in the company’s annual report on Form 10-K for the year ended January 31, 2015, and Form 10-Q for the quarter ended April 30, 2015, which are on file with the Securities and Exchange Commission. Autodesk does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made. Revenue in APAC was $148 million, a decrease of 13 percent compared to the second quarter last year as reported, and 9 percent on a constant currency basis. Everyone—from design professionals, engineers and architects to digital artists, students and hobbyists—uses Autodesk software to unlock their creativity and solve important challenges. Autodesk and the Autodesk logo are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries.

Autodesk reserves the right to alter product and services 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. A reconciliation between the GAAP and non-GAAP estimates for fiscal 2016 is provided below or in the tables following this press release. (1) Non-GAAP earnings per diluted share exclude $0.21 related to stock-based compensation expense and $0.07 for the amortization of acquisition related intangibles, net of tax. (3) GAAP net loss per diluted share includes $0.94 related to the non-cash GAAP tax charge of $214 million to reduce U.S. deferred tax assets. As a result, amortization previously reflected in “General and Administrative” expense was reclassified to “Amortization of Purchased Intangibles” within Operating Expenses.

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, non-GAAP diluted shares used in per share calculation and billings. In the case of billings, we reconcile to revenue by adjusting for the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period and other discounts. 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 primary indicators management uses as a basis for our planning and forecasting of future periods.

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. For certain cloud based and enterprise license offerings, subscriptions represent the monthly average activity within the last three months of the quarter end date. Total subscriptions do not include data from education offerings, consumer product offerings, certain Creative Finishing product offerings, Autodesk Buzzsaw, Autodesk Constructware and third party products.

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