After beating market expectations in its third quarter
report and providing encouraging guidance, shares of software firm Autodesk
(ADSK 133.42, +10.37, +8.4%) re-test the 200-day simple moving average (134.28)
as investors look highly, too, upon the company’s deal to acquire construction
software company PlanGrid.
Jumping right into the report, then, Autodesk announced better than expected third quarter earnings per share of $0.29 on revenues which, too, came in ahead of expectations at $660.9 mln, up about 28% year/year. Billings were $654 mln, an increase of 30% versus a year ago. Under ASC 605, billings were $661 mln, an increase of 31% compared to last year’s third quarter.
Deferred revenue was $1.79 bln, an increase of 2% compared to a year ago. Total deferred revenue (deferred revenue plus unbilled deferred revenue) was $2.24 bln, an increase of approximately 17%. Under ASC 605, total deferred revenue was $2.32 bln, an increase of approximately 21% compared to the third quarter last year.
Total Annualized Recurring Revenue (ARR), one of the company’s most important performance metrics, was $2.53 bln, a 33% increase compared to last year, and 31% on a constant currency basis. Under the prior revenue accounting standard, ASC 605, total ARR was $2.49 bln, an increase of 31% compared to the third quarter last year. Subscription plan ARR was $1.93 bln, an increase of 108% and 105% on a constant currency basis. Under ASC 605, subscription plan ARR was $1.89 bln, an increase of 105%.
Total subscriptions increased 143,000 from the second quarter of fiscal 2019 to 4.08 mln at the end of the third quarter. Subscription plan subscriptions increased 252,000 from the second quarterto 3.12 mln at the end of the third quarter, seeing a benefit from 71,000 maintenance subscribers that migrated to product subscription under the company’s maintenance-to-subscription, or M2S, program, an important feature of ADSK’s broader SaaS transition.
Guiding for FY19, Autodesk gave expectations for non-GAAP EPS of $0.95-0.99, up from the previous $0.87-0.95. The company also modestly raised revenue guidance to growth of 23-24% to $2.533-2.543 bln, up from the prior expectation of 21-22% growth to $2.485-2.505 bln. Billings guidance was also upped, to 17-19% growth to $2.610-2.640 bln from the previous indication of 16-19% growth to $2.58-2.64 bln on total ARR growth of 30-31%.
Autodesk also announced the acquisition of PlanGrid, a provider of construction productivity software, for $875 mln net of cash. PlanGrid's software will be integrated with both Autodesk Revit software and the Autodesk BIM 360 construction management platform.
The transaction is expected to close during Autodesk's fourth quarter. The company expects the deal to contribute slightly to revenue and to be modestly negative for profitability and cashflows for the fourth quarter. For fiscal year 2020, Autodesk expects PlanGrid to contribute approximately $100 mln in ARR and to be slightly dilutive to profitability and cash flow. Inclusive of the transaction, the company is maintaining its free cash flow goal for the year.
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