Autodesk Earnings Call Nuggets: Changes in Sales Impact and Revenue Growth

Autodesk (NASDAQ:ADSK) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Changes in Sales Impact

Walter Pritchard – Citigroup: Carl, I’m wondering if you could talk about from a sales perspective, obviously you guys have made some changes over the last year maybe it’s been a little bit longer than a year here, and I’m just wondering what impact, how are you guys isolating the impact that the change in sales may have had on your performance this quarter?

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Carl Bass – President and CEO: I think the changes in sales, we’ve made are diminishing in importance. There are a number of things, if you dig into the numbers more deeply this time Walter, you’ll see a couple of things that are different from before. We highlighted strength in Central and Northern Europe. If you remember back, we talked about weakness there before, particular strength in our major accounts. One of the things that was clearly different this quarter was weakness in our major accounts. Major accounts has been something that we’ve been investing in and really proud of the accomplishments, to some extent it looks to me like we ran the table a little bit in Q4, a little bit more than we thought, and so there was weakness around that. There was weakness in the emerging economies and so, I’d say in a sense of continuing improvement, I’d say we probably saw slightly more effect from overall macro and less from our internal sales things, but there’s probably still some lingering effects. Moving forward, we’re not particularly pleased with the results this quarter, and we put in a bunch of plans already to rectify it. So, we see kind of small incremental improvements we can make to drive better results for the rest of the year, and so, we will continue to tweak those. The major changes are behind us, but it would probably be too far for me to go and say, that there was no impact at all from the changes we’ve made in the sales organization.

Walter Pritchard – Citigroup: Then, just a question for Mark. You guys had talked about in the past, sometimes seeing some early indications of what’s coming in the future on the macros side from things like LT sales and subscription renewals, subscription attach rate, could you just talk about kind of what you’re seeing from the perspective of those metrics and what that tells you about the macro environment?

Mark Hawkins – EVP and CFO: Sure, Walter. I would say a say a couple of things, one is that LT is very promo driven and certainly I think was affected by the macro environment that we saw, I’d say especially in April. I think the one thing that we do know is how to address LT and I think promotional activities can certainly help that, but we certainly in effect in April for sure. I think, other things that we saw, generally things like our subscription renewal and attach, they were off slightly in terms of the metrics, but we’re pretty stable really. In total, they’re pretty close to highs that we’ve had in the past year. So, not a material change in that effect

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Revenue Growth

Jay Vleeschhouwer – Griffin Securities: Carl or Mark I’d like to ask your thoughts on the composition of the revenue growth that you are looking for this year, the 3%? In other words how are you thinking about the contribution from new license revenue growth versus maintenance revenue growth and even the residual from upgrades and cross-grades? With respect to the new business there are two things I’d like you to perhaps reflect upon; one is that your new unit volume through the end of fiscal ’13, would appear to be still than somewhat below what it was in the last full year before the recession, so you still had some upside left so to say to get back to where you were in terms of new unit volume. Back at AU in November, Mark, you pointed out that the majority of your new unit volume was attributable to suites when you exclude (LT). So if you could perhaps talk about how you are thinking about the overall opportunity to grow new license volume this year versus where you were and the other components of revenue?

Carl Bass – President and CEO: Yes. So maybe we can combine on this. I mean one thing I continue to see two areas which will drive the growth in the end of the year. One is continued focus on suites. Suites did well. They do just seem to do well enough to offset some of the short comings in individual products and the other one is (indiscernible). So those are probably the two areas of focus and will certainly be on new units. Some of our forecast was against an increasing headwind on FX. So we see a change in currency happening and a little instability out there economically. But when you look at new volume, it’s going to be driven by volume in suites and volume in LT…

Mark Hawkins – EVP and CFO: I would add, I’d certainly support Carl’s comments. The other thing when you were breaking it between new license and subs, Jay, we don’t always guide out that way, but I think a couple of points to note that, subscription revenue grew nicely at 6% in Q1 and I think the other thing to point out to, is that our deferred revenue, which is where subscription comes from is up 17% year-on-year, the total deferred revenue balance is $851 million. So, again you have to model it all the ways out there. All I would say is subscription should be a part of that growth equation as we go forward.

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Jay Vleeschhouwer – Griffin Securities: Clarification on the earlier question about maintenance. Could you break it down across the business units or segments? In other words, is there any appreciable difference in attach rates or renewal rates or just general growth in billings across PSEB and AEC and Manufacturing?

Mark Hawkins – EVP and CFO: I would say it’s different, Jay. I would say things – there are certain geographies where the attach is slightly different than other geographies. They don’t give specifics, but for example, on Asia-Pac the attach is slightly different than it would be for example in the United States, it would be one dynamic that we have called out. The other important dynamic that I will call out, Jay, that’s important, is that the actual renewal rate on suites is actually higher than the renewal rate in average for the Company, and the Company’s close to highs within a few points of the high for the Company. So, I think the fact that suites are something that Carl talked that we’re going to be growing in the future, that’s not a bad dynamic.