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A New App, But Sharply Lower Revenues At Autodesk

Posted on Friday, Nov 20th 2009

CAD market researchers expected the industry to sustain growth despite the recession. In an overall U.S. market of $5.2 billion in 2007, the industry was expected to grow 15% in 2008 and another 10% in 2009 to $6.6 billion, and to maintain a CAGR of 11% through 2012. However, Autodesk’s (NASDAQ:ADSK) most recent performance does not seem to indicate such high growth numbers.

Autodesk continued to against the economic climate and announced that revenues fell 31% over the year to $416.9 million with EPS of $0.27. However, the company managed to exceed the market’s expected $415.2 million revenues and EPS of $0.23.

By segment, license and other revenues fell to $236.1 million compared with $421 million earned a year ago. Maintenance revenues were relatively flat at $180.8 million compared with $186.1 million in revenues recorded a year ago. Maintenance renewal rates in the quarter seem to have stabilized following declines in the previous four quarters. This stabilizing is also reflected in the installed base of commercial maintenance customers, which was approximately flat sequentially. Renewal rates had been impacted earlier as customers had reduced workforces, resulting in fewer seats to renew. Autodesk also saw 4% sequential growth in new commercial seats.

There were sequential improvements in a few other metrics as well, suggesting that demand is stabilizing. Revenues from the Americas grew 2% over the quarter to $164 million but fell 25% over the year. EMEA revenues grew 1% over the quarter to $159 million and fell 38% over the year. Revenues in Asia Pacific were $94 million and fell 4% sequentially, and 29% over the year. Revenues from emerging economies of $62 million fell 2% sequentially and 46% over the year.

Combined revenues from model-based 3D design solutions of $122 million were flat sequentially and reported a fall of 25% over the year. Sequential growth in Civil 3D, Navisworks, Robot Structural Analysis and Moldflow products was offset by declines in both the Inventor and Revit families.

Revenue from 2D horizontal and vertical productsregistered a marginal sequential decline and an annual decline of 37% to $189 million. Combined revenue from AutoCAD and AutoCAD LT products grew 2% sequentially but fell 39% compared to the third quarter last year.

Earlier this quarter, Autodesk launched its first commercial mobile application, the SketchBook Mobile software. The professional paint and drawing application, which offers a full set of sketching tools designed specifically for the iPhone and the iPod Touch, has already recorded more than one million downloads within two months of its launch. With more than 141,000 copies sold and more than 900,000 free versions of the SketchBook Mobile Express downloaded, the application was the number one entertainment app and number three top grossing app in the United States within weeks of launch. SketchBook Mobile competes with Brushes, the app that Jorge Colombo used to create his popular New Yorker cover.

In the quarter Autodesk spent $39 million to repurchase approximately 1.7 million shares of common stock.

But the outlook wasn’t all rosy. For Q4, the company projects revenues of $420 million-$440 million with an EPS of $0.19-$0.24, compared with the market’s expected revenues of $433.5 million with EPS of $0.25. For the full-year, Autodesk is now looking at revenues of $1.69 billion-$1.70 billion with EPS of $0.88-$0.93, compared with the market’s expected revenues of $1.69 billion and EPS of $0.90.

The stock has recovered significantly after last quarter’s results sent it to 5-year lows of $11.70, and it is now trading at $24.05 with a market capitalization of $5.52 billion.

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