Revenues plunge as the company shifts to a subscription model.
Autodesk reported quarterly revenue of USD$512 million for the first quarter of FY 2017, a drop of 21 percent from the previous quarter. The company also reported a loss of USD$173 million. Of that, USD$52 million is attributable to “restructuring,” or, more specifically, the cost of reducing its workforce.
As noted in a recent Autodesk press release, revenue was impacted by changes to its business model (as it moves from perpetual licensing to subscription pricing) and new cloud-based products with a lower initial purchase price.
Perpetual licenses of desktop products, many of which cost thousands of dollars, were mostly discontinued last quarter. In comparison, cloud-based products are licensed on a per-month basis for a few dollars per month.
Autodesk is undergoing a catharsis, according to industry critic, Ralph Grabowski, who said on his blog that “Autodesk is experiencing dismal financial results as customers with permanent licenses are rightfully reluctant to switch from freely using the software on their computers to paying rent.”
The decline has been downplayed by CEO Carl Bass, who, in his wrap-up of the quarter, made the developments seem as though they were expected—a necessary, market-driven change that keeps up with the changing software industry at large. “We’re striking a healthy balance in achieving both short-term and long-term goals,” said Bass.
Highlights
Most affected by the change was the Asia-Pacific region, dropping 42 percent from the same quarter a year ago. The Americas, Autodesk’s biggest market, was the least affected region, dropping only 11 percent.
While architecture, engineering and construction (AEC) and manufacturing products dropped eight percent and 11 percent, respectively, the “platform and emerging products” group (which includes AutoCAD) dropped over 40 percent compared to Q1 FY 2016.
Quarterly revenue over the last three years. (Image courtesy of Autodesk.)
A complete report of the Autodesk financial results is available here.
