A couple of people have emailed about yesterday’s posts on Autodesk’s Q4 results, asking if there were any negative aspects to the earnings data released. That’s a fair question since I focused on the bright spots in what really was a dismal year for the engineering software space. Did Autodesk have a lousy 2009? Yes — but. The “but” is what matters now, since it’s how a company reacts to forces outside of its control, capitalizes on signs that things are improving and positions itself for the future.
In picking apart Autodesk’s Q4 and fiscal 2010 results, I could only come up with a few negatives — all of which are mitigated by improvement towards the end of the year:
• Deferred maintenance revenue declined from $469 million at the start of fiscal 2010 to $464 million by the end of the year. Typically, this number climbs during the year but the recovery in Q4 to earlier levels is a good sign.
• For the year, total license and other revenues were $981 million, down 39%, roughly equal to the percentage declines seen by other engineering software suppliers. But total license revenue in Q4 was down only 13% to $270 million; looking only at the full-year totals gives a falsely negative picture.
• Subscription (aka maintenance) revenue was $732.5 million, up only 3%, for the year. It’s unclear how much of the increase in maintenance billings was due to buyers getting ahead of a price increase in March that will penalize customers who have defaulted on maintenance renewal.
• The Design Solutions Group reported revenue of $1.524 billion, down 25%, but $410 million for Q4, down only 5% due to strength in the Manufacturing and AEC units.
• Within the Design Solutions Group, Manufacturing reported revenue of $387 million for fiscal 2010, down 21%; AEC was $514 million, down 20%; and Media and Entertainment reported revenue of $189 million, down 28%. Each group saw sequential growth in Q4.
• It appears as though revenue from 3D products may overtake the traditionally strong AutoCAD and AutoCAD LT sometime soon. AutoCAD and AutoCAD LT accounted for about $550 million in revenue in fiscal 2010, down 35%; the 3D products brought in around $500 million, down 20% from fiscal 2009. (Note that Autodesk gives a percentage of total revenue so these totals includes maintenance, which is more likely to be attractive to 3D customers.) I’m not sure that revenue from 3D products overtaking AutoCAD and LT is entirely a bad thing, though.
Autodesk may benefit from the fact that its year-end happens after every other vendor’s; the other guys are first to offer up the really bad news and we’re pleasantly surprised when Autodesk’s results are not as bad as we expect. But these really were good results. Investors agree, sending the share price up 11% at mid-day.