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Strong Annualized Recurring Revenue (ARR) Growth Highlights Autodesk Fourth Quarter Results
SAN RAFAEL, Calif., March 6, 2018 /PRNewswire/ — Autodesk, Inc. (NASDAQ: ADSK) today announced its financial results for the fourth quarter of fiscal 2018.
[Image: PRNewsfoto/Autodesk, Inc.]
**Fourth Quarter Fiscal 2018**
- Subscription plan Annual Recurring Revenue (ARR) reached $1.18 billion, representing a 106% increase compared to the same period last year and 105% on a constant currency basis.
- Total ARR was $2.05 billion, up 25% from the previous year both in reported terms and on a constant currency basis.
- Subscription plan subscriptions increased by 371,000 from the third quarter of fiscal 2018 to 2.27 million at the end of the fourth quarter, with 168,000 maintenance subscribers converting to product subscriptions under the maintenance-to-subscription program.
- Total subscriptions rose by 127,000 to 3.72 million at the end of the fourth quarter.
- Deferred revenue totaled $1.96 billion, an increase of 9% compared to the same quarter last year. Unbilled deferred revenue was $326 million, and total deferred revenue (including unbilled) was $2.28 billion, up approximately 25% year-over-year.
- Revenue amounted to $554 million, reflecting a 16% growth compared to the fourth quarter of the prior year, both in reported terms and on a constant currency basis.
- Total GAAP spending was $736 million, up 14% from the previous year's quarter.
- Non-GAAP spending was $571 million, an increase of 2% over the same period last year. A reconciliation between GAAP and non-GAAP results is included in the tables provided.
- GAAP diluted net loss per share was $(0.79), compared to $(0.78) in the same quarter last year.
- Non-GAAP diluted net loss per share was $(0.09), versus $(0.28) in the previous year's quarter.
Andrew Anagnost, President and CEO of Autodesk, stated, "We continue to execute effectively on our business model transition and are well-positioned to accelerate ARR growth next year. We were pleased with the significant increase in total annualized revenue per subscription (ARPS) and a better-than-expected conversion rate under the maintenance-to-subscription program. The quarter saw a shift from individual products to higher-value Industry Collections, impacting subscription additions but supporting ARR growth."
Scott Herren, CFO of Autodesk, added, "We achieved a major milestone in our business model transition as subscription plan ARR surpassed maintenance plan for the first time, aligning with our projections. In addition to strong revenue and ARR growth, we also experienced strength in billings and deferred revenue, generating better-than-expected cash flow from operations. Our fiscal 2018 was another successful year, setting us up to achieve our fiscal 2020 goals for ARR growth and free cash flow."
**Fourth Quarter Operational Overview**
Subscription plan ARR stood at $1.18 billion, a 106% increase compared to the same quarter last year and 105% on a constant currency basis. This includes $152 million related to the maintenance-to-subscription program. Maintenance plan ARR decreased by 18% to $879 million, a 17% decrease on a constant currency basis. Total ARR for the quarter increased 25% to $2.05 billion.
Subscription plan subscriptions (product, EBA, and cloud) reached 2.27 million, a net increase of 371,000 from the previous quarter, driven by new product subscriptions and 168,000 conversions from maintenance plans. Maintenance plan subscriptions declined by 244,000 to 1.45 million, which includes the 168,000 that moved to product subscriptions. Total subscriptions were 3.72 million, a net increase of 127,000 from the previous quarter.
Recurring revenue accounted for 93% of total revenue in the fourth quarter, compared to 86% in the same period last year.
Revenue in the Americas rose by 10% to $232 million, while EMEA revenue increased by 19% to $221 million, and APAC revenue grew by 23% to $100 million.
**Financial Highlights for Fiscal 2018**
- Total ARR increased by 25% in reported terms and on a constant currency basis.
- Total subscriptions grew by 20% to 3.72 million.
- Both subscription plan ARR and subscriptions exceeded those of the maintenance plan.
- Total GAAP spending increased by 1% in reported terms and on a constant currency basis. Total non-GAAP spending increased by 1% in reported terms and remained flat on a constant currency basis.
- Total deferred revenue increased by approximately 25%.
**Business Outlook**
Autodesk's business outlook for the first quarter and full year fiscal 2019 assumes a continuation of the current economic environment and foreign exchange rates. A reconciliation between GAAP and non-GAAP estimates is provided below or in the tables following this press release.
Starting with the first quarter of fiscal 2019, Autodesk will adopt the new revenue accounting standard, ASC 606. The company will apply the modified retrospective transition method and does not expect a change in the timing or amount of revenue recognition for most product subscription offerings and enterprise agreements. Sales commissions will be capitalized and amortized under the new standard, and there is no expected significant impact on reported expenses for the full fiscal year, although the timing of recognizing deferred commissions may vary from historical seasonality. None of the ASC 606 impacts affect cash flow.
**First Quarter Fiscal 2019 Guidance**
- Revenue: $565 – $575 million
- EPS GAAP: ($0.34) – ($0.31)
- EPS non-GAAP: $0.11 – $0.14
**Full Year Fiscal 2019 Guidance**
- Billings: $2,720 – $2,820 million
- Revenue: $2,495 – $2,545 million
- GAAP spend growth: (2.5%) – (1.5%)
- Non-GAAP spend growth: 1 – 2%
- EPS GAAP: ($0.77) – ($0.59)
- EPS non-GAAP: $0.92 – $1.10
- Net subscription additions: 500k – 550k
- Total ARR growth: 29% – 31%
**Tax Rates**
The recent U.S. tax reform legislation will result in a lower U.S. annual effective tax rate. From a GAAP perspective, Autodesk is in a U.S. loss position due to the business model transition and recent restructuring. Tax credits in the U.S. have had a full valuation allowance since the second quarter of fiscal 2016. As a result, there is no impact from U.S. tax reform in our tax provision, except for a benefit from revaluing certain deferred tax liabilities at the lower U.S. rate. We will utilize tax attributes that have previously been fully valued to offset the one-time transition tax.
From a non-GAAP perspective, Autodesk has eliminated the impact of the transition tax and re-measurement of deferred tax assets and liabilities from our tax expense as one-time, non-recurring expenses. We are still analyzing the full impact of tax reform but currently estimate our GAAP annual effective tax rate at (388)% for fiscal 2019 and 21% for fiscal 2020. We estimate our non-GAAP annual effective tax rate at 19% for fiscal 2019 and between 17% and 18% for fiscal 2020 and beyond.
**Earnings Conference Call and Webcast**
Autodesk will host its fourth-quarter conference call today at 5:00 p.m. ET. The live broadcast can be accessed at http://www.autodesk.com/investor. Supplemental financial information and prepared remarks for the conference call will be posted to the investor relations section of Autodesk’s website simultaneously with this press release.
A replay of the broadcast will be available at 7:00 p.m. ET at http://www.autodesk.com/investor. This replay will be maintained on Autodesk’s website for at least 12 months.
**Glossary of Terms**
- **Annualized Recurring Revenue (ARR):** Represents the annualized value of our average monthly recurring revenue for the preceding three months.
- **Annualized Revenue Per Subscription (ARPS):** Calculated by dividing annualized recurring revenue by the total number of subscriptions.
- **Billings:** Total revenue plus the net change in deferred revenue from the beginning to the end of the period.
- **Cloud Service Offerings:** Individual term-based offerings deployed through web browser technologies or in a hybrid software and cloud configuration.
- **Constant Currency (CC) Growth Rates:** Adjustments made to eliminate fluctuations caused by changes in foreign currency exchange rates.
- **Enterprise Business Agreements (EBAs):** Programs providing enterprise customers with token-based access or a fixed maximum number of seats to a broad pool of Autodesk products over a defined contract term.
- **License and Other Revenue:** Includes perpetual license revenue and other revenue such as standalone consulting and training.
- **Maintenance Plan:** Provides customers with a cost-effective and predictable budgetary option to obtain productivity benefits of new releases and enhancements.
- **Product Subscription:** Offers flexible and cost-effective access to 3D design, engineering, and entertainment software tools.
- **Recurring Revenue:** Consists of revenue from traditional maintenance plans and subscription plan offerings.
- **Subscription Plan:** Comprises term-based product subscriptions, cloud service offerings, and EBAs.
- **Subscription Revenue:** Includes subscription fees from term-based product subscriptions, cloud service offerings, and EBAs.
- **Total Deferred Revenue:** Calculated by adding together total short-term, long-term, and unbilled deferred revenue.
- **Total Subscriptions:** Consists of subscriptions from maintenance plans and subscription plan offerings that are active and paid as of the quarter-end date.
- **Unbilled Deferred Revenue:** Represents contractually stated or committed orders under multi-year billing plans for subscription, services, license, and maintenance for which the associated revenue has not been recognized and the customer has not been invoiced.
**Safe Harbor Statement**
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding ARR growth acceleration, short-term and long-term targets, the impacts of the business model transition, expectations regarding the transition of product offerings to subscription, acceptance by customers and partners, expectations for billings, revenue, subscriptions, spend, EPS, and ARR, the impact of tax reform legislation, and the adoption of ASC 606. Actual results may differ materially from these statements due to various factors.
**About Autodesk**
Autodesk makes software for people who make things. If you’ve ever driven a high-performance car, admired a towering skyscraper, used a smartphone, or watched a great film, chances are you’ve experienced what millions of Autodesk customers are doing with our software. Autodesk gives you the power to make anything. For more information visit autodesk.com or follow @autodesk.
*Autodesk, AutoCAD, AutoCAD LT, BIM 360 and Fusion 360 are registered trademarks 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.*
© 2018 Autodesk, Inc. All rights reserved.