Autodesk reports, investors like a lot

Autodesk last night reported results that were nothing short of terrific. As CEO Carl Bass said during the earnings call, “After navigating through the biggest economic downturn in Autodesk history, we’re now experiencing a healthy recovery and achieving record results in several areas. Highlights for the fourth quarter include 16% growth in total revenue, double-digit revenue growth in all of our geographies and business segments, a sharp increase in large deal activity, record revenue for our Manufacturing business, and record revenue for our Revit family of products.”

Before we get to the details, a couple of bigger-picture points:

• Mr. Bass said that the mission has changed for the Manufacturing segment, which he characterized as Autodesk’s largest opportunity: “The dynamics of the Manufacturing segment have shifted dramatically. Our initial goal was to provide 80% of the functionality at 20% of the price. We’re still often seen as a provider of high-value but less strategic software but through our investment in R&D and acquisitions, we now have a product portfolio that is the most comprehensive and functional in the industry. The combination of modeling, data management and simulation capabilities has allowed us to grow much faster than our major global competitors despite the difficult economic times. We are substantially outperforming all of our major global competitors with stronger products and better sales channels.” “Most comprehensive” they are still working on, and I’m not sure about “substantially outperforming”, but it is undeniable that Autodesk’s Manufacturing strategy to provide incremental improvements is very attractive to more tentative customers who seek a short-term payback for their investment.

• When asked about Moldflow, Mr. Bass said that he’s “very happy” with the acquisition and that it rounds out Autodesk’s ability to serve customers in new ways. “Moldflow complements our manufacturing portfolio. When you now look in places were we’re not the primary engineering tool, we maybe in there with design tools like Alias. We’re in there with documentation and tooling, we’re there in the design of the factory, we’re there with our analysis and simulation capabilities. So we can have a footprint even when we’re not the primary engineering tool. Obviously, we prefer it when we’re more than that. Blue Ridge Numerics [will provide] the same thing in simulation and analysis. I’m thrilled with what we’ve been doing with analysis and simulation.”

• According to one analyst, Revit now accounts for 10% of total revenue (as always, it was a compound question, so Mr. Bass may or may not not have been agreeing with that part, but he did not say it was incorrect).

The details for Q4:

• Total revenue was $528 million, up 16% from a year ago.
• By type, license revenue was $330 million, up 22%. Maintenance revenue was $198 million, up 6%.
• By geography, revenue from EMEA was $212 million, up 13% year/year. Revenue from the Americas was $193 million and increased 15%. Revenue from Asia Pacific was $123 million, an increase of 22%. Revenue from emerging economies was $85 million, an increase of 16% and represented 16% of total revenue in Q4.
• By line of business, revenue from the Platform Solutions and Emerging Business segment was $181 million, up 10%; revenue from the AEC segment was $162 million, an increase of 18%, while revenue from the Manufacturing segment was $133 million, a record, and up 23%. Finally, revenue from the Media and Entertainment business was $52 million, up 12%. Revenue from Revit family products was up 40% to set a quarterly record while Inventor revenue was up 23% year/year.
• Looking at this another way, Autodesk reports that revenue from “model-based design products” (which now includes AutoCAD LT for some reason) was 32% of total revenue in Q4, or $169 million, up from $137 million a year ago — a 23% increase. AutoCAD and LT revenue grew 15% and accounted for $164 million in revenue. But the importance of AutoCAD and LT is decreasing — these products accounted for 33% of revenue for the year, down from 38% in fiscal 2009.
• And, finally, one more cut: Autodesk has introduced new categories for its products, Flagship, Suites and “New and adjacent”. Flagship includes AutoCAD, LT, the AutoCAD vertical products (Mechanical, Plant, Civil, etc.) and standalone Revit; revenue from these products was $307 million, an increase of 13% from last year. The Suites (Inventor family, Plant Design suites, Revit family, etc.) contributed $126 million in Q4, up 28% from the year earlier and up 18% from FQ3 — largely because these are still being rolled out. Finally, revenue from “New and adjacent products” (Algor, Alias, Moldflow, Navisworks, etc.) was $95 million, up 9%.
• Autodesk recorded 31 transactions in Q4 that exceeded $1 million, up from 22 a year ago.

For the full year,
• Revenue was $1.95 billion, up 14% from fiscal 2010.
• By type, license revenue was $1172 million, up 19%. Maintenance was $780 million, up 6%. It’s interesting to note that momentum clearly picked up in Q4, as license growth had been a sequential 4%, 0%, 0% and then 18% in Q4.
• By geography, revenue from EMEA rebounded in Q4, more than making up for declines earlier in the year; total revenue for the year was $783 million, up 17%. Revenue from the Americas was $701 million and increased 7%. Revenue from Asia Pacific was $468 million, an increase of 21%. Revenue from emerging economies was $300 million, representing 15% of total revenue in Q4.
• By line of business, revenue from the Platform Solutions and Emerging Business segment was $716 million, up 15%; revenue from the AEC segment was $568 million, an increase of 11% and revenue from the Manufacturing segment was $470 million, up 21%. Finally, revenue from the Media and Entertainment business was $198 million, up 5%.
• For the year, revenue from Flagship products was $1.174 billion, up 15%; revenue from Suites was $440 million, up 26% and revenue from New and Adjacent products was $336 million, down 3%. These are interesting categories, for which we don’t have a lot of history — but Flagship in F2011 is nowhere near the $1.5 billion reported for F2009; Suites are up slightly from the $429 reported in F2009 and “New” is down sharply (20%) from the $422 million reported in F2009.
• “New and adjacent” seems to be a disjointed category of products that may someday graduate to Suite or some other status; in my view, for Autodesk to be credible as a CAE supplier, it must break these products into its own category and report on their progress.

Autodesk has initiated guidance for the first quarter and fiscal 2012 that reflects both Mr. Bass’s optimism and the reality that Autodesk sells into small companies still struggling and into geographies where the future is uncertain. Revenue for the first quarter is expected to be $510 million to $525 million, for an increase of 7% to 11%, including any contributions from Blue Ridge Numerics and Scaleform, the two recently announced acquisitions. For fiscal 2012, Autodesk expects revenue to increase by approximately 10%, to around $2.147 billion.

But before we get giddy, let’s remember that Autodesk revenue hit a high of $2.3 billion in January 2009, so we’re not back to pre-recession levels just yet. 2010 was a great year, with momentum building in so many ways; it will be interesting to see how 2011 shapes up. After all, Autodesk sees manufacturing as its greatest opportunity at the exact same moment that its competitors are seeking to expand out of it and into AEC and other areas. Stay tuned …