The details:
• License and other revenue was $281 million, an increase of 22% y/y and flat sequentially.
Maintenance revenue was $192 million, up 4% y/y and a decrease of 1% sequentially. But the company reports that Maintenance billings increased 6%, and that maintenance renewal rates are up both sequentially and y/y, to pre-downturn levels.
• For the first time in several quarters, Autodesk reported y/y growth in all geographies. Revenue from EMEA was $189 million, up 20% y/y but down 5% from Q1.
• Revenue from the Americas was $168 million, an increase of 6% y/y and 4% sequentially to the highest level in 2 years. The company highlighted its government business in the US, though it didn’t say what exactly it is selling to the Air Force: Mr. Bass said that “During the quarter, we signed a contract with the United States Air Force that has an initial value of approximately $5 million, most of which was recognized in the second quarter. We have the opportunity to significantly expand this relationship going forward, and this win illustrates the strong traction we are gaining with government agencies.” Asked to comment on the general economy and Autodesk’s prospects, Autodesk CEO Carl Bass said, “We see steady improvement. The recovery is not linear; it’s full of fits and starts. I think there is a pretty sizable disconnect between the people I talk to who are running businesses and what you read on Wall Street. People are continuing to make investments and they realize that even in this economic environment, there’s plenty of opportunity.”
• Revenue from Asia Pacific was $116 million, up 17% y/y and up 1% from Q1. Revenue from emerging economies was $71 million, an increase of 13% y/y and 5% sequentially to represented 15% of total revenue in Q2.
• The Platform Solutions and Emerging Business segment reported revenue of $177 million, up 19% y/y but down 3% sequentially. Revenue from AutoCAD and AutoCAD LT grew 25 % y/y even as revenue from AutoCAD-based vertical products such as AutoCAD Architecture and AutoCAD Mechanical increased 14% y/y.
• AEC revenue was $133 million, an increase of 8% y/y but a decrease of 3% from Q1. Growth came from Revit, where revenue was up 20% y/y.
• Manufacturing revenue was $113 million, up 18% y/y and up 4% sequentially, with revenue from Inventor products up 16% y/y. When asked about the prospects for Inventor, Mr. Bass said, “In many ways, we’ve exceeded the capability of the older high-cost products. What differs is the way we bring that to market and one of the ways we remedy that is through more direct sales, more consulting services, some provided by us, some provided by our partners, but certainly for the large accounts, a more direct relationship is what is required for people to base their entire engineering process on our products.” This may not be as revolutionary as it sounds: Around 20% of Autodesk revenue already is direct, since mega-companies are hard to serve through channel partners. What is new is the idea of a new go-to-market strategy focused on direct selling. It will be interesting to see how Autodesk implements such a two-pronged approach.
• The company reports that revenue from its model-based design products (Inventor, Revit, Civil3d, etc.) remains at 29% of total revenue — which makes it $138 million in Q2, up 14% y/y; the growth was led by Inventor and Revit.
• Revenue from the Media and Entertainment business was $50 million, up 6% from the second quarter last year and up 8% sequentially.
• The company also offered Q3 guidance. It expects revenue for Q3 to be in the range of $450 million to $475 million, which would be an 8% to 14% increase over last year and flat to a 5% sequential decline in what has historically been its weakest quarter of the year.
There were a couple of unusual moments during the call — there always are. Analysts seemed a bit upset that Autodesk had performed better in Europe than it had anticipated, meaning their (the analysts’) forecasts were proven wrong. Mr. Bass and CFO Mark Hawkins defended their guidance for Q2 saying that they look at the economy as it is when they make their forecasts — the uncertainty they saw during Q1 led them to the forecasts for Q2. When pressed on whether the company’s Q3 forecast was likely to be as conservative, CFO Hawkins said “I think you should take our guidance at face value. That’s the guidance that we have and it’s our best comprehension of everything that’s going on in the world, whether it’s foreign exchange or investments that we’re making …”
Later in the call, Mr. Bass addressed the channel checks carried out by brokerage firms that I wrote about earlier in the week. An analyst on the call asked Autodesk to comment on the resellers’ perception that end-user companies are hiring, but that those workers are using seats under maintenance — meaning the reseller isn’t seeing any new license sales as a result of the hiring. Mr. Bass calmly let loose: “I’ve often said that resellers think there is some circuitous route that uses you guys to deliver messages to us. A lot of times I think what you hear for having bought them a bottle of wine or $100 check is not exactly what they’re seeing in their business.” Mr. Bass then pointed out that the 46% increase in revenue from commercial new licenses had to be coming, at least in part, from resellers.
The call was unfortunately short on the kind of details I care about. Analysts should have asked why Autodesk’s performance in Europe was so weak when Germany boosted growth in the Euro zone to its fastest pace in four years during Q2. Are India and China still standouts in Asia? Which manufacturing verticals are adopting Inventor? How are Moldflow and Algor doing? … But in any case, Autodesk reported great results for Q2 and seems to have its business well in had, whether the analysts agree or not.
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