Schnitger Corporation

Autodesk slightly exceeds (depressing) expectations

All day the news dribbled in: Credit Suisse cuts its estimate for Autodesk’s 2010 revenue to
$1.684 billion from $1.713 Billion; Bank of America/Merrill Lynch thought that the "focus
could shift from [operating expenditure] cuts to revenue growth" and that its 2010 forecast
was fine at $1.688 billion. Wall Street analysts had a consensus revenue estimate of $419
million. Since Autodesk itself had forecast revenue between $400 million and $440 million,
this was resoundingly … a safe choice.

By the time Autodesk actually reported at 4PM Eastern, it was a tad anti-climatic. The

– Total revenue was $426 million — ahead of consensus — but down 29% from a year ago
– Autodesk reported a GAAP-basis net loss for the quarter of $32.1 million, due largely to
one-timecosts associated with cost-trimming measures.
– Revenue from Asia Pacific was $95 million, down 36%; revenue from EMEA was $167
million, down 35%; revenue in the Americas was $164 million, down 15% from a year ago.
– Manufacturing segment revenue was down 21%, platform revenue was down 11% (due
largely to the way Autodesk combines "Platform and Emerging Economies" — Platform by
itself was basically flat), and AEC revenue was flat for Q1 2010 compared to a year ago.

CEO Carl Bass said that it the company is starting to see "slowing deterioration" in the
business climate in some geos and in major accounts around the world. He believes that
sequential results are more indicatie of a turnaound and, viewed that way, things do seem
to be improving with a slower negative slope to results from the Americas and Asia. One
product bright spot: companies continue to show interest in Autodesk’s 3D solutions as a
way of re-emerging stronger when business does improve.

New CFO Mark Hawkins said that direct revenue was up slightly as a percent of total

Autodesk did something very unusual with this earnings release: It provided the gross
margin performance for all of its business segments. Gross margin is the difference
between product revenue and the cost of creating those products (before expenses such as
marketing, rent and sales which are often difficult to assign to a specific product). Most
profitable was AEC at 93%; Manufacturing and Platform were each 91% and Media was
73% in Q1. If I were in the Media division, I’d be worried …

Visibility does appear to be improving. Autodesk issued a narrower guidance range for
revenue in Q2, forecasting revenue between $395 million and $420 million, with a net loss of
between $0.09 and $0.03 per share on a GAAP basis.

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