PLM This Week: Great Quarter for Autodesk Subscriptions, Terrible for Short-Term Profits
Felix Nilsson posted on February 26, 2016 |

Great Quarter for Autodesk Subscriptions, Terrible for Short-Term Profits

Carl Bass, president and CEO of Autodesk.

Carl Bass, president and CEO of Autodesk.

The figures Autodesk recently released for the fourth quarter of its fiscal year of 2015 make for interesting reading.

The CAD and PLM company is currently experiencing a business model transformation, moving away from perpetual software licenses with maintenance contracts and toward “cloud style subscriptions.”

Earlier this year, Autodesk announced a restructuring plan aiming to cut 10 percent of their workforce. The result would be a leaner organization with most of its revenue in the form of recurring subscriptions. The transformation is set for completion in 2017, when Autodesk has said it will discontinue perpetual licenses.

Since this announcement, total subscriptions have increased by 109,000 to 2.58 million, approximately 62,000 of which were new-model cloud subscriptions.

This business model shift also affects the way Autodesk does its reporting. The company now uses a measure called annualized recurring revenue (ARR), which means that Autodesk reports the value of the subscriptions normalized over a one-year period.

The total ARR during the fourth quarter was $1.38 billion, an increase of 10 percent compared to the fourth quarter last year. However, actual revenues dipped slightly to $648 million, a decrease of two percent compared to the fourth quarter of last year. The operating margin was recorded at one percent, down from two percent.

Autodesk CEO and president Carl Bass called the quarter “terrific” and said that these results demonstrate the company’s business model transition was working. He also noted that the new model subscriptions represented over half of the subscriptions sold during the quarter.

Taking a look at the numbers for the full fiscal year of 2015, subscriptions increased by 345,000. 60 percent of these were new model subscriptions. ARR increased by 10 percent, while revenue was flat at $2.50 billion.

In a forward looking statement, Bass said that, “Fiscal 2017 will be the most unique in the company’s history as we transition from selling perpetual licenses to subscriptions. The business model transition is broadening our addressable market and advancing our market leadership position.”

It’s clear that this transformation will eat up some of Autodesk’s short term profitability, but it is the following quarters that will be the true test of the success of the company’s new subscription model.

We have yet to see the effects of an Autodesk which does not sell perpetual licenses at all. This process started on February 1, when Autodesk stopped selling perpetual licenses for standalone products. Suites will follow suit at the end of July. We have yet to see the full impact of Autodesk’s new go to market model.


Retail Chain Chooses 3DEXPERIENCE

PLM consultant TechniaTranscat announced that it has chosen Runsvengruppen, owner of low-price retailer ÖoB, as a strategic partner in the implementation of a PLM solution from Dassault Systèmes

The solution will enable ÖoB to further improve their efficiency, facilitate further expansion and give the company access to a larger range of products.

Runsvensgruppen operates over one hundred department stores under the brand ÖoB in Sweden and has chosen a PLM solution based on the 3DEXPERIENCE platform from Dassault Systèmes. TechniaTranscat will be a strategic supplier of software, support and maintenance services.

“We chose TechniaTranscat as our PLM partner based on their strong expertise within PLM for retail and their local presence,” said Peter Adell, head of IT at Runsvengruppen.


NGC Implements Fashion PLM at Brian Brothers

Enterprise software developer NGC announced that menswear firm Brian Brothers is implementing its fashion PLM and SCM system.

According to a press release, Brian Brothers reviewed apparel software solutions from other leading PLM vendors and chose NGC based on its extensive knowledge of the fashion industry and the strength and flexibility of its best-in-class enterprise solution.

NGC’s PLM/SCM system will provide Brian Brothers with an enterprise platform that shares information among its design and production teams, improving collaboration, accuracy and responsiveness.

The system will integrate with Brian Brothers’ legacy ERP solution, which will allow the company to implement a fashion design and production system without having to undergo a costly ERP replacement.


Aras Enters Strategic Partnership with CGI

PLM developer Aras announced that it has entered into a partnership with Canadian consulting firm, CGI Business Consulting.

CGI will deliver specialized intellectual property and integration services for Aras products, including the PLM platform, Aras Innovator.

According to the agreement, CGI will now include the Aras Innovator platform & suite in its business transformation practices and methodologies. CGI plans to develop operational frameworks and IP for system engineering, advanced manufacturing engineering and compliance processes including Advanced Product Quality Planning (APQP). The company will also be creating an ISO IDMP standards repository for life science data used in submissions.

CGI will also use the Innovator platform internally for “rapid prototyping” of processes, to give business transformation recommendations to customers at an early stage of the project.

Recommended For You