Autodesk Reports Strong Fourth Quarter Results

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 billings. Excluding billings, these non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, restructuring charges, amortization of purchased intangibles, gain and loss on strategic investments, and related income tax expenses. 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. 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 primary 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.

   
Three Months Ended January 31, Fiscal Year Ended January 31,
2015   2014 2015   2014
(Unaudited) (Unaudited)  
 
GAAP cost of license and other revenue $ 53.9 $ 48.1 $ 208.5 $ 178.7
Stock-based compensation expense (1.4 ) (1.1 ) (4.6 ) (3.8 )
Amortization of developed technology (11.5 ) (10.6 ) (48.6 ) (40.1 )
Non-GAAP cost of license and other revenue $ 41.0   $ 36.4   $ 155.3   $ 134.8  
 
GAAP cost of subscription revenue $ 35.6 $ 23.8 $ 133.6 $ 95.6
Stock-based compensation expense (1.4 ) (0.6 ) (4.3 ) (2.2 )
Amortization of developed technology (1.1 ) (1.0 ) (4.6 ) (4.1 )
Non-GAAP cost of subscription revenue $ 33.1   $ 22.2   $ 124.7   $ 89.3  
 
GAAP gross profit $ 575.1 $ 514.7 $ 2,170.1 $ 1,999.6
Stock-based compensation expense 2.8 1.7 8.9 6.0
Amortization of developed technology 12.6   11.6   53.2   44.2  
Non-GAAP gross profit $ 590.5   $ 528.0   $ 2,232.2   $ 2,049.8  
 
GAAP marketing and sales $ 289.9 $ 232.3 $ 998.0 $ 842.6
Stock-based compensation expense (21.4 ) (16.1 ) (72.4 ) (58.6 )
Non-GAAP marketing and sales $ 268.5   $ 216.2   $ 925.6   $ 784.0  
 
GAAP research and development $ 191.5 $ 162.4 $ 725.2 $ 611.1
Stock-based compensation expense (16.7 ) (12.4 ) (56.0 ) (43.7 )
Non-GAAP research and development $ 174.8   $ 150.0   $ 669.2   $ 567.4  
 
GAAP general and administrative $ 70.4 $ 53.0 $ 283.3 $ 211.8
Stock-based compensation expense (8.2 ) (5.9 ) (28.3 ) (23.9 )
Non-GAAP general and administrative $ 62.2   $ 47.1   $ 255.0   $ 187.9  
 
GAAP amortization of purchased intangibles $ 9.3 $ 9.0 $ 39.8 $ 36.5
Amortization of purchased intangibles $ (9.3 ) $ (9.0 ) $ (39.8 ) $ (36.5 )
Non-GAAP Amortization of purchased intangibles $   $   $   $  
 

GAAP restructuring charges, net

$ $ 6.3 $ 3.1 $ 12.8

Restructuring charges, net

  (6.3 ) (3.1 ) (12.8 )

Non-GAAP restructuring charges, net

$   $   $   $  
 
GAAP operating expenses $ 561.1 $ 463.0 $ 2,049.4 $ 1,714.8
Stock-based compensation expense (46.3 ) (34.4 ) (156.7 ) (126.2 )
Amortization of purchased intangibles (9.3 ) (9.0 ) (39.8 ) (36.5 )

Restructuring charges, net

  (6.3 ) (3.1 ) (12.8 )
Non-GAAP operating expenses $ 505.5   $ 413.3   $ 1,849.8   $ 1,539.3  
 
GAAP income from operations $ 14.0 $ 51.7 $ 120.7 $ 284.8
Stock-based compensation expense 49.1 36.1 165.6 132.2
Amortization of developed technology 12.6 11.6 53.2 44.2
Amortization of purchased intangibles 9.3 9.0 39.8 36.5

Restructuring charges, net

  6.3   3.1   12.8  
Non-GAAP income from operations $ 85.0   $ 114.7   $ 382.4   $ 510.5  
 
GAAP interest and other income, net $ (21.1 ) $ 4.6 $ (37.7 ) $ (4.9 )

Loss on strategic investments

15.7   0.8   23.3   1.8  
Non-GAAP interest and other income, net $ (5.4 ) $ 5.4   $ (14.4 ) $ (3.1 )
 
GAAP provision for income taxes $ 18.6 $ (2.4 ) $ (1.2 ) $ (51.1 )
Discrete GAAP tax provision items (9.5 ) (7.9 ) (18.7 ) (10.2 )
Income tax effect of non-GAAP adjustments (29.9 ) (16.6 ) (75.8 ) (60.5 )
Non-GAAP provision for income tax $ (20.8 ) $ (26.9 ) $ (95.7 ) $ (121.8 )
 
GAAP net income $ 11.5 $ 53.9 $ 81.8 $ 228.8
Stock-based compensation expense 49.1 36.1 165.6 132.2
Amortization of developed technology 12.6 11.6 53.2 44.2
Amortization of purchased intangibles 9.3 9.0 39.8 36.5

Restructuring charges, net

6.3 3.1 12.8

Loss on strategic investments

15.7 0.8 23.3 1.8
Discrete GAAP tax provision items (9.5 ) (7.9 ) (18.7 ) (10.2 )
Income tax effect of non-GAAP adjustments (29.9 ) (16.6 ) (75.8 ) (60.5 )
Non-GAAP net income $ 58.8   $ 93.2   $ 272.3   $ 385.6  
 
GAAP diluted net income per share $ 0.05 $ 0.23 $ 0.35 $ 1.00
Stock-based compensation expense 0.21 0.15 0.71 0.57
Amortization of developed technology 0.05 0.05 0.23 0.19
Amortization of purchased intangibles 0.04 0.04 0.17 0.16

Restructuring charges, net

0.03 0.01 0.06

Loss on strategic investments

0.07 0.10
Discrete GAAP tax provision items (0.04 ) (0.03 ) (0.08 ) (0.04 )
Income tax effect of non-GAAP adjustments (0.13 ) (0.07 ) (0.32 ) (0.26 )
Non-GAAP diluted net income per share $ 0.25   $ 0.40   $ 1.17   $ 1.68  
 
 

Autodesk, Inc.

Other Supplemental Financial Information (a)

 

Fiscal Year 2015

 

QTR 1

 

QTR 2

 

QTR 3

 

QTR 4

 

YTD 2015

Financial Statistics ($ in millions, except per share data):

         

Total Net Revenue:

$ 593 $ 637 $ 618 $ 665 $ 2,512
License and Other Revenue $ 316 $ 350 $ 321 $ 354 $ 1,341
Subscription Revenue $ 276 $ 287 $ 298 $ 310 $ 1,171
 
GAAP Gross Margin 87 % 86 % 86 % 87 % 86 %
Non-GAAP Gross Margin (1)(2) 89 % 89 % 89 % 89 % 89 %
 
GAAP Operating Expenses $ 472 $ 499 $ 517 $ 561 $ 2,049
GAAP Operating Margin 7 % 8 % 2 % 2 % 5 %
GAAP Net Income $ 28 $ 31 $ 11 $ 12 $ 82
GAAP Diluted Net Income Per Share (b) $ 0.12 $ 0.13 $ 0.05 $ 0.05 $ 0.35
 
Non-GAAP Operating Expenses (1)(3) $ 427 $ 451 $ 467 $ 506 $ 1,850
Non-GAAP Operating Margin (1)(4) 17 % 18 % 13 % 13 % 15 %
Non-GAAP Net Income (1)(5)(c) $ 74 $ 82 $ 58 $ 59 $ 272
Non-GAAP Diluted Net Income Per Share (1)(6)(b)(c) $ 0.32 $ 0.35 $ 0.25 $ 0.25 $ 1.17
 
Total Cash and Marketable Securities $ 2,388 $ 2,169 $ 2,157 $ 2,299 $ 2,299
Days Sales Outstanding 50 52 55 63
Capital Expenditures $ 15 $ 17 $ 28 $ 16 $ 76
Cash Flow from Operating Activities $ 219 $ 96 $ 136 $ 257 $ 708
GAAP Depreciation, Amortization and Accretion $ 36 $ 37 $ 37 $ 36 $ 146
 
Deferred Subscription Revenue Balance (c) $ 848 $ 839 $ 839 $ 937 $ 937
 

Revenue by Geography:

Americas $ 206 $ 223 $ 231 $ 238 $ 898
Europe, Middle East and Africa $ 226 $ 244 $ 238 $ 273 $ 980
Asia Pacific $ 161 $ 170 $ 149 $ 154 $ 634
% of Total Rev from Emerging Economies 13 % 15 % 15 % 16 % 15 %
 

Revenue by Segment:

Architecture, Engineering and Construction $ 196 $ 218 $ 217 $ 242 $ 873
Platform Solutions and Emerging Business $ 212 $ 208 $ 188 $ 189 $ 797
Manufacturing $ 147 $ 168 $ 170 $ 190 $ 676
Media and Entertainment $ 38 $ 44 $ 43 $ 43 $ 167
 

Other Revenue Statistics:

% of Total Rev from Flagship 50 % 48 % 47 % 45 % 48 %
% of Total Rev from Suites 35 % 36 % 36 % 37 % 36 %
% of Total Rev from New and Adjacent 14 % 16 % 17 % 18 % 16 %
% of Total Rev from AutoCAD and AutoCAD LT 32 % 29 % 27 % 25 % 28 %
 

Favorable (Unfavorable) Impact of U.S. Dollar Translation Relative to

Foreign Currencies Compared to Comparable Prior Year Period:

FX Impact on Total Net Revenue $ (9 ) $ $ (4 ) $ (11 ) $ (24 )
FX Impact on Cost of Revenue and Total Operating Expenses $ 2 $ (2 ) $ 3 $ 14 $ 17
FX Impact on Operating Income $ (7 ) $ (2 ) $ (1 ) $ 3 $ (7 )
 

Gross Margin by Segment:

Architecture, Engineering and Construction $ 176 $ 196 $ 194 $ 220 $ 786
Platform Solutions and Emerging Business $ 191 $ 185 $ 167 $ 169 $ 712
Manufacturing (a) $ 133 $ 152 $ 153 $ 167 $ 604
Media and Entertainment $ 29 $ 32 $ 32 $ 34 $ 127
Unallocated amounts (a) $ (15 ) $ (16 ) $ (15 ) $ (15 ) $ (59 )
 

Common Stock Statistics:

Common Shares Outstanding 227.5 227.2 227.2 227.0 227.0
Fully Diluted Weighted Average Shares Outstanding 231.6 232.4 231.5 232.2 232.4
Shares Repurchased 2.0 1.9 1.9 1.1 6.9
 

Subscriptions (in millions):

Total Subscriptions (c) 1.94 2.01 2.13 2.23 2.23
 
(a) Totals may not agree with the sum of the components due to rounding.
(b) Earnings per share were computed independently for each of the periods presented; therefore the sum of the earnings per share amounts for the quarters may not equal the total for the year.

(c) Total Subscriptions consists of subscriptions from our maintenance, desktop, cloud service and enterprise license offerings that are active as of the quarter end date. 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. Subscriptions acquired with the acquisition of a business are captured once the data conforms to our subscription count methodology and when added, may cause variability in the quarterly comparisons of this calculation.

 

(1) 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 billings. Excluding net billings, these non-GAAP financial measures are adjusted to exclude certain costs, expenses, gains and losses, including stock-based compensation expense, restructuring charges, amortization of purchased intangibles, gain and loss on strategic investments, and related income tax expenses. 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. 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 primary 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 Autodesk's press release.

 
                         
(2) GAAP Gross Margin 87 %     86 %     86 %     87 %   86 %
Stock-based compensation expense

%

 

%

 

%

 

%

 

1

%
Amortization of developed technology 2 %     3 %     3 %     2 %   2 %
Non-GAAP Gross Margin 89 % 89 % 89 % 89 % 89 %
 
(3) GAAP Operating Expenses $ 472 $ 499 $ 517 $ 561 $ 2,049
Stock-based compensation expense (32 ) (38 ) (41 ) (46 ) (157 )
Amortization of purchased intangibles (11 ) (10 ) (10 ) (9 ) (40 )

Restructuring charges, net

(2 )     (1 )             (3 )
Non-GAAP Operating Expenses $ 427 $ 451 $ 467 $ 506 $ 1,850
 
(4) GAAP Operating Margin 7 % 8 % 2 % 2 % 5 %
Stock-based compensation expense 6 % 6 % 7 % 8 % 7 %
Amortization of developed technology 2 % 2 % 2 % 2 % 2 %
Amortization of purchased intangibles 2 % 2 % 2 % 1 % 1 %

Restructuring charges, net

%

 

 

%

 

 

%

 

 

%

  %
Non-GAAP Operating Margin 17 % 18 % 13 % 13 % 15 %
 
(5) GAAP Net Income $ 28 $ 31 $ 11 $ 12 $ 82
Stock-based compensation expense 34 40 43 49 166
Amortization of developed technology 13 15 13 13 53
Amortization of purchased intangibles 11 10 10 9 40

Restructuring charges, net

2 1 3

Loss on strategic investments

4 3 1 16 23
Discrete GAAP tax provision items (2 ) (3 ) (5 ) (10 ) (19 )
Income tax effect of non-GAAP adjustments (16 )     (15 )     (15 )     (30 )   (76 )
Non-GAAP Net Income $ 74 $ 82 $ 58 $ 59 $ 272
 
(6) GAAP Diluted Net Income Per Share $ 0.12 $ 0.13 $ 0.05 $ 0.05 $ 0.35
Stock-based compensation expense 0.14 0.18 0.19 0.21 0.71
Amortization of developed technology 0.06 0.06 0.06 0.05 0.23
Amortization of purchased intangibles 0.05 0.04 0.04 0.04 0.17

Restructuring charges, net

0.01 0.01

Loss on strategic investments

0.02 0.01 0.07 0.10
Discrete GAAP tax provision items (0.01 ) (0.01 ) (0.02 ) (0.04 ) (0.08 )
Income tax effect of non-GAAP adjustments (0.07 )     (0.06 )     (0.07 )     (0.13 )   (0.32 )
Non-GAAP Diluted Net Income Per Share $ 0.32 $ 0.35 $ 0.25 $ 0.25 $ 1.17
 

Reconciliation for Billings:

Q115

   

Q215

   

Q315

   

Q415

 

FY15

Year over year change in GAAP Net Revenue 4 % 13 % 11 % 13 % 10 %
Change in deferred revenue in the current period 8 % 12 % 13 % 2 % 8 %
Change in acquisition related deferred revenue and other (2 )%     2 %     1 %     (2 )%   %
Year over year change in Billings 10 %     27 %     25 %     13 %   18 %
 

Reconciliation for Guidance:

The following is a reconciliation of anticipated full year fiscal 2016 GAAP and non-GAAP operating margins:

Fiscal 2016

 
GAAP operating margin 2 %

4

%
Stock-based compensation expense 8 % 8 %
Amortization of purchased intangibles

3

%    

3

%  
Non-GAAP operating margin

13

%     15 %  

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