Posts Tagged ‘carl bass’

Autodesk FY 2016 Media & Entertainment Revenue Declines 4.2%

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 01 2016

Autodesk reported revenue for Q4 fiscal year 2016 from its Media and Entertainment (M&E) business segment of $40 million, a decrease autodesk_header_logo_140x23of 7% compared to the fourth quarter of the 2015 fiscal year, and a 2.5% increase against the previous quarter.  The year-over-year decline was primarily related to a decline in the M&E business’s Creative Finishing product lines, as Autodesk existed the Creative Finishing hardware business during Q4 FY 2016.

M&E gross margins for the fourth quarter were 80.0% ($32m), down from 79.1% during the same period a year ago, and up from 79.4% during the previous quarter.

Full Year 2016 M&E Revenue Declines 4.2%

Media & Entertainment revenue for the full FY 2016 was $160 million, down 4.2% versus the FY 2015.

M&E gross margins for the full year 2016 were 79.4%, up from 76% in FY 2015.

Decline in M&E Revenue Continues

As shown below, the latest year-on-year decline in M&E revenue continues the trend that began more than six years ago.

Q42016-Graph

 

Between fiscal 2008 and fiscal 2016, the company’s M&E business has a CAGR of -5.8%.  During this same time, M&E sales as a percentage of total Autodesk revenue has declined from 12% to 6%.

The decline is consistent with the guidance from Autodesk management.  Revenue headwinds impacting the M&E business have included the shift from hardware to software, the collapsing of functionality into Suites, and the shift from software licenses to subscription.

Update on Business Model Transition

As part of the earnings release, Autodesk provided several updates on the Company’s ongoing transition to a Software-as-a-Service (“SaaS”) business model.  Notably, the total subscriptions (for all Autodesk products) increased by 345,000 to 2.58 million during fiscal year 2016.

The close of the fourth quarter of fiscal 2016 also marked a milestone for Autodesk’s transition to a SaaS business model.  It was the final quarter where Autodesk sold perpetual licenses for individual products.  Q1 FY 2017 is the first quarter where individual products are only available through subscription offerings.  Starting with Q3 FY 2017 Autodesk will cease selling perpetual licenses to its Suite products as well.  Meaning, as of the second half of 2017, Autodesk will have fully transitioned to selling subscription offerings.

During Autodesk’s conference call with analysts, CEO Carl Bass added further commentary on the business model transition.  “…we are dramatically increasing the lifetime value of our customers with our new business model. While this creates short-term downward pressure on our traditional financial metrics, we have repeatedly called out how it creates significant financial returns over the next 3 to 5 years” said Bass.

Part of the business model transition also requires realignment of costs structures to a new sales and marketing approach.  Autodesk had announced in early February 2016 a restructuring plan to accelerate its transition to a Cloud and Subscription Business.  The restructuring plan called for the reduction of 10% of Autodesk’s workforce.

Commenting on the changes to sales and marketing, Carl Bass offered the following, “we are simplifying our entire go-to-market strategy to align with the concept of being an all-subscription company. This involves a significant increase in our direct customer sales and marketing efforts, both at the enterprise level and through e-commerce. Not only will this change the cost structure, but it will increase — it will greatly increase how effectively we serve our customers.”

 

 

Related Content

Press Release: Autodesk Reports Fourth Quarter Financial Results

Press Release: Autodesk Announces Restructuring Plan to Accelerate Transition to Cloud and Subscription Business

 

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Autodesk FY 2015 Media & Entertainment Revenue Declines 13.9 Percent

Analysis, Annual Results, Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Feb 27 2015

autodesk_header_logo_140x23

Autodesk reported that its Q4 FY 2015 revenue from its Media and Entertainment (M&E) business segment was $43m, an increase of 5% compared to the same period last year, and flat with the previous quarter.

M&E gross margins for the fourth quarter were 79.1% ($34m), down from 81% during the same period a year ago, and up from 74.4% last quarter

 

Full Year M&E Revenue Declines 13.9 Percent

Media & Entertainment revenue for the full FY 2015 was $167m, down 13.9% versus the full FY 2013.

M&E gross margins for the full year 2015 were 76%, down from 81% in both 2013 and 2012.

 

Decline in M&E Revenue Continues

As shown below, the latest year-on-year decline in M&E revenue continues the trend that began more than five years ago.

Autodesk M&E Revenue 2008-15

 

Between fiscal 2008 and fiscal 2015, the company’s M&E business has a CAGR of -6%.  During this same time, M&E sales as a percentage of total Autodesk revenue has declined from 12% to 6%.

This is perhaps not surprising, given that company has been talking for some time about the anticipated decline in M&E revenue.  Last year, Autodesk CEO Carl Bass said the company expects its M&E revenue to decline over time as Autodesk incorporates greater functionality into its design suites.

 

Autodesk M&E: A Tale of Two Product Lines

Another reason for the ongoing decline is likely the changing mix of products sold by Autodesk into the M&E sector, including the sale of hardware versus software.

Autodesk breaks out products sold media and entertainment customers into two separate categories:

  • Animation (including design visualization): includes products, such as Autodesk Maya, Autodesk 3ds Max, and the Autodesk Entertainment Creation Suites. These products provide tools for digital sculpting, modeling, animation, effects, rendering and compositing, for design visualization, visual effects and games production.

 

  • Creative Finishing: include Autodesk Flame, Autodesk Smoke, Autodesk Lustre, and Autodesk Flare. These products provide editing, finishing and visual effects design and color grading.

 

In a filing with securities regulators last year, the company said that for the year ended January 31, 2014, revenue from Creative Finishing products declined by 17% due to “a general decrease in M&E industry end-market demand.”  In the same filing, the company said that Animation products had declined 7% during the fiscal year ended January 31, 2014.

On last night’s Q4 and full year fiscal 2015 earnings call, the company did not discuss its M&E product in either the prepared remarks or the Q&A session with equity analysts.

Indeed, the company has not discussed M&E on an earnings call since August 2014, when an analyst from JP Morgan asked Autodesk CEO Carl Bass: “How should we think about where the media and entertainment revenue line goes from here, is it something that actually could start to fade away?”

Bass replied: “No. I think, as we always try to distinguish, media and entertainment they are two different parts of the business. There is the creative finishing. Creative finishing has been diminishing, some of it is just nature of the market and some of it has to do with the hardware component in there which we no longer sell. And then there’s the other part which is the software part of the business. The software part of the business is good and healthy and we like all the dynamics in that part of the business. What we see in the other part less happy with it. That’s been going on for the last half dozen years in the creative finishing part.”

.

.

Related Content:

Press Release: Autodesk Reports Strong Fourth Quarter Results

Previous Year: Autodesk Media & Entertainment Revenue Down 16% in Q4 FY 2013, Down 10% for Full Fiscal Year

2012: Autodesk Media & Entertainment Revenue Rises Nine Percent in Fiscal 2012

.

.

© Devoncroft Partners 2009 – 2015. All Rights Reserved.

.

.

 

Autodesk Media & Entertainment Revenue Drops 8% in Q1 FY 2014, Readies Cloud-Based Launch

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
May 17 2013

Autodesk reported that its Q1 FY 2014 revenue from its Media and Entertainment segment (M&E) was $47m, a decline of 8% versus the same period a year ago, and flat compared to the previous quarter.

M&E gross margins for the quarter were $37m (79%), down from 82% for the same period a year ago, and flat compared to the previous quarter.

Autodesk’s M&E revenue has been in decline for the past several quarters — something the company has said for the past year that it expects to continue as it incorporates greater functionality into its design suites.

The company also plans to introduce new revenue models for M&E customers, including cloud-based rental.

On the company’s conference call with equity analysts, company CEO Carl Bass said that Autodesk will soon begin rolling out a cloud-based suite of products for applications for various markets including M&E, whose customers company believes is ideally suited for this approach. “I think that’s just the nature of the work within the industry is more project-based. The economic structure of the industry revolves around projects in both of those industries. I think they’re going to be far more attractive in Media and Entertainment than they will in Manufacturing.”

“Starting this summer, we will roll out term-based or rental offerings of some of our suites and select individual products. These rental offerings of our desktop products are designed to give our customers even more flexibility in how they utilize our products and will provide us with new ways to take advantage of new market opportunities. These offerings are based on a significantly different model, and we expect adoption and consumption of our cloud and rental offerings to increase gradually over time.”

.

.

Related Content:

Press Release: Autodesk Reports First Quarter Results

Autodesk Q1 FY 2014 Earnings Call Transcript

Pervious year: Autodesk Media & Entertainment Revenue Slips 5 Percent in Q1 2012

.

© Devoncroft Partners. All Rights Reserved.

.

Autodesk Media & Entertainment Revenue Declines 9 percent in Q3 FY 2013

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Nov 18 2012

Autodesk reported that its Q3 2012 revenue from its Media and Entertainment segment (M&E) was $48m, a decline of 9% versus the same period a year ago and a decline of 2% versus the previous quarter.

The potential for M&E revenue decline was telegraphed earlier this year by Autodesk CEO Carl Bass, who said at that time that the company expects its M&E revenue to decline over time as Autodesk incorporates greater functionality into its design suites.

M&E gross margins for the quarter were $38m (79%), down from $39m (80%) last quarter.

Media & Entertainment revenue for the first nine months of fiscal 2013 was $148m.

M&E gross margins for the first nine months of fiscal 2013 were 80%

.

.

Related Content:

Press Release:  Autodesk Reports Third Quarter FY 2013 Results

Previous quarter: Autodesk Says Media & Entertainment Revenue Fell 10% in Q2 FY 2013, Will Restructure Overall Business Strategy

.

© Devoncroft Partners. All Rights Reserved.

.

Autodesk Says Media & Entertainment Revenue Fell 10 Percent in Q2 FY 2013, Will Restructure Overall Business Strategy

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 23 2012

Autodesk announced that its Media & Entertainment (M&E) revenue for the second quarter of its fiscal 2013 was $49m, a decrease of 10% versus the same period a year ago, and a decrease of 4% versus the previous quarter.

On the company’s earnings conference call, Autodesk CEO Carl Bass attributed the decline in M&E revenue during the quarter to weakness in India and delayed shipments of new products.

The potential for M&E revenue decline was telegraphed last quarter by Bass, who said at that time that the company expects its M&E revenue to decline over time as Autodesk incorporates greater functionality into its design suites.

M&E Gross margins for the quarter were 80%, down from 82% last quarter.

Media & Entertainment revenue for the first half of fiscal 2013 was $99m

 

Lowered Guidance Crushes Stock:

Autodesk said that it now expects to achieve overall sales growth of 4% to 6% in fiscal 2013, down from the company’s previous guidance of at least 10%.  The company also said its operating margins will decrease by 2.1% during the fiscal year, rather than rising by 1.2% as previously announced.

The results sent shares down by more than 20% in after-hours trading,

 

Autodesk to Restructure Overall Business Structure

Bass said the company’s total results for the quarter were disappointing, and that the company has taken the decision to restructure its overall business in order to focus on what it described as the continuing shift to cloud and mobile computing. The company anticipates taking a pre-tax charge in the range of $50m to $60m in connection with this restructuring program.

The company said it will be reducing its overall staffing levels in the near-term, but will continue to invest in key development areas. Autodesk also intends to consolidate certain leased facilities.

“This restructuring is squarely focused on our continued transformation and shift to more cloud and mobile computing,” said Bass. “This action allows us to continue to invest in recruiting and hiring people who can bring Autodesk the skills and experience that are critical for achieving our mid and long-term goals. As part of the ongoing platform shift, it’s clear to us that design and engineering software will move to cloud and mobile platforms. Cloud and mobile has been a major investment area for Autodesk over the past couple of years and this restructuring will accelerate our progress as we intend to further invest in employees with expertise and skill sets essential to this transition. Additionally, this restructuring helps us reduce costs and streamline the organization as a continuation of the activities we began earlier this year.”

Separately, in response to the company’s second quarter performance, the uneven economic environment, and outlook for the rest of the year, Autodesk is implementing further spend management measures, such as reducing non-sales related travel and the number of its contractors.

It is unclear what impact these action will have on the company’s broadcast and post production-oriented business lines, which make up less than 10% of the Autodesk’s total revenue.

.

.

Related Content:

Press Release:  Autodesk Reports Second Quarter Results

Autodesk Q2 FY 2013 Earnings Call Transcript

Previous quarter: Autodesk Media & Entertainment Revenue Slips 5 Percent in Q1 2013

.

© Devoncroft Partners. All Rights Reserved.

.

Autodesk Media & Entertainment Revenue Slips 5 Percent in Q1 FY 2013

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
May 18 2012

Autodesk announced that its Media & Entertainment (M&E) revenue for the first quarter of fiscal 2013 was $51m, a decrease of 5% versus the same period a year ago, and a decrease of 7% versus the previous quarter.

M&E Gross margins for the quarter were 82%, up from 77% last quarter.

The performance of Autodesk’s M&E business lagged the company’s total results.  On an overall basis, Autodesk’s Q1 2012 revenue increased 11% versus last year to $589m.

Company-wide gross margins for the first quarter were 90%.

On the company’s conference call with equity analysts, Autodesk CEO Carl Bass said the M&E division had some “bad bounces” during the quarter. According to Bass, the M&E results were negatively impacted by customers delaying product purchase until the company’s new Smoke for Mac product is available, which he said has “frozen sales to some degree,” and by one of the company’s hardware vendors delaying the release of its product.  Bass also said that Autodesk expects its M&E revenue to decline over time as the company incorporates greater functionality into its design suites.

.

Related Content:

Press Release: Autodesk Reports 11 Percent First Quarter Revenue Growth

Autodesk Q1 2013 earnings call transcript

Previous Quarter: Autodesk Media & Entertainment Revenue Rises Nine Percent in 2011

.

© Devoncroft Partners. All Rights Reserved.

.

Autodesk Media & Entertainment Revenue Grows 5% in Q3 as Company Continues Shift to Software Only Sales

broadcast industry trends, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Nov 19 2010

Autodesk reported that its Q3 revenue from media and entertainment (M&E) was $50m, an increase of 5% compared to the third quarter last year and an increase of 2% versus the previous quarter.  The company, which is most well-known for its CAD software, provides content creation, compositing, color grading and media management products to broadcast and post-production clients.

Year to date, the company’s M&E revenue was $146m, versus $143m during the first nine months of last year.

On the earnings conference call with equity analysts, company president & CEO Carl Bass said that Autodesk is working to transition from what was primarily a bundled business of hardware and software to eventually a software-only business.  “We’ve had a long stated goal of increasing our software component in [the M&E] business while ramping down our hardware… the software business is doing quite well,” said Bass. “We are selling less and less hardware every quarter. I’m very happy with the progress in the [M&E] group and the transition to software. Our competitive position is good there, and our products are used in many of the most important media and entertainment projects.”

.

You can read the full Autodesk Q3 earnings press release here.

A transcript of the Q3 earnings conference call is here.

.

%d bloggers like this: