A month has gone by since the last earnings report for Autodesk, Inc. ADSK. Shares have lost about 19.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Autodesk reported third-quarter fiscal 2018 non-GAAP loss of 12 cents per share, narrower than the Zacks Consensus Estimate of a loss of 13 cents. The figure was within the guided range of a loss of 12–16 cents per share.
Revenues of $515.3 million beat the consensus mark of $514.1 million and increased nearly 5.3% year over year. The figure was within the guided range of $505–$515 million.
Moreover, deferred revenues increased 15% to $1.76 billion in the quarter, which reflects growing strength of the business model. Total recurring revenue was 92% in the reported quarter, a significant increase from 78% reported in the year-ago quarter.
Per Autodesk, restructuring will drive long-term growth by realigning investments in strategic areas like digital infrastructure, facilitating development of core products and increasing spend on construction opportunities.
Quarter Details
Revenues were impacted by a 61.7% year-over-year decline in License revenues (7.7% of total revenue), which were $39.8 million in the quarter.
Maintenance revenues (47.4% of total revenue) also declined 10.5% from the year-ago quarter to $244.4 million, primarily due to lower subscriptions.
However, the company’s business model transition continues to be on track. Subscription revenues soared 105.6% year over year to $231.1 million, driven by strong product subscriptions.
Total subscriptions increased approximately 146K from the prior quarter to 3.6 million in the quarter. Subscription plan (product, end-of-life and cloud subscriptions) increased approximately 307K from the last quarter to 1.90 million.
The company’s maintenance to subscription or M2S program recorded 110K subscriptions. New customers represented about 30% of the mix in the quarter and contributed a significant portion of subscription additions.
Autodesk is also gaining from the Enterprise Business Agreement (EBA) program. In the quarter, the company witnessed a substantial increase in deals valued at over $1 million with significant contribution from EBAs. Notably, Autodesk won large EBA renewals this quarter from two engineering companies, each of which increased their annual contract value by more than 50%.
Cloud subscription additions were impressive driven by robust performance of BIM 360 and Fusion tools. The company’s focus to fast integrate new technology into Fusion 360, advancement of BIM 360 platform and the growth of its Forge platform are positives.
Total annualized recurring revenues (ARR) were $1.90 billion, up 24% from the year-ago quarter and 25% on a constant currency (cc) basis. Subscription plan ARR surged 108% at cc.
Autodesk’s broad product portfolio continues to generate new customers in both domestic and overseas markets. Geographically, revenues in the Americas increased 1% year over year to $215 million. EMEA revenues increased 8% to $205 million, while the same from APAC increased 12% from the year-ago quarter to $95 million.
Operating Results
Non-GAAP gross margin expanded 30 basis points (bps) from the year-ago quarter to 86.5%.
The company reported non-GAAP operating loss of $26.2 million in the quarter compared with the year-ago quarter’s operating loss of $42.9 million.