SAN
FRANCISCO, May 31, 2024 /PRNewswire/
-- Autodesk, Inc. (NASDAQ: ADSK) announces the results of the
Audit Committee investigation. As previously announced on
April 1, 2024, the Audit Committee of
the Board of Directors initiated an internal investigation
regarding the company's free cash flow and non-GAAP operating
margin practices. The Committee has completed its planned
procedures with respect to the investigation. The company's
management has determined that there will be no restatement or
adjustment of any audited or unaudited, filed or previously
announced, GAAP or non-GAAP financial statements.
The company is also providing preliminary results for first
quarter fiscal 2025 and business outlook.
"We appreciate your patience as we work through this important
process. We take situations like this very seriously and are
grateful to put the investigation behind us," said Andrew Anagnost, Autodesk president and CEO. "In
the first quarter of fiscal 2025, we generated broad-based growth
in AEC and manufacturing across products and regions. The new
transaction model implementation is on track. Our strong start sets
us up well to achieve our goals for the year."
The company also announces the following executive
appointments.
Elizabeth "Betsy" Rafael has been appointed by the Board as
Interim Chief Financial Officer (Principal Financial Officer),
effective May 31, 2024. As Interim
Chief Financial Officer, she is not currently an "independent
director" for purposes of the Nasdaq Stock Market and has stepped
down from the Audit Committee. She remains a director of the
company.
Deborah L. Clifford has been
appointed as the company's Chief Strategy Officer, reporting to the
Chief Executive Officer, effective May 31,
2024. Her responsibilities will include, among other things,
corporate development, new vertical businesses that are outside
Autodesk's existing product groups, and the company's Social Impact
and Sustainability efforts.
Autodesk is working diligently to file its annual report on Form
10-K as soon as possible and to hold an earnings call to discuss
first quarter fiscal 2025 results. Until the Form 10-K is filed and
full first quarter earnings are reported, the company remains in a
closed period and is restricted in its communications with
investors.
Summary of the principal findings of the Audit
Committee
The relevant time period for the investigation was fiscal years
2022, 2023, and 2024. A summary of the principal findings of the
Audit Committee are set forth below:
- The company has historically relied on multiyear contracts with
its enterprise and product subscription customers, billed upfront,
to help meet its free cash flow targets. During the relevant
period, the company engaged in programs designed to incentivize
customers to accept multiyear upfront billing, renew early, and/or
pay before the end of the fiscal year.
- The company has disclosed its practice of incentivizing
customers to adopt multiyear upfront billing arrangements. It has
also acknowledged that discounted multiyear upfront contracts
reduce revenue and lower billings in out years. Though prior to
fiscal year 2024, the company did not quantify free cash flow
attributable to multiyear upfront billings, it has noted the
contribution of upfront collections to fluctuations in the
company's quarterly reported long-term deferred revenue.
- During fiscal year 2022, the company announced that it had
begun to shift enterprise customers to contracts billed annually,
and that it had assumed fiscal 2023 enterprise contracts would be
billed annually. The company subsequently determined, however, to
pursue multiyear upfront contracts with enterprise customers to
help meet its fiscal year 2023 free cash flow goal. Upfront
billings of enterprise customers in fiscal year 2023 substantially
exceeded historical levels, helping the company to meet its lowered
annual free cash flow target.
- In addition, during the relevant period, certain decisions
regarding discretionary spending, collections, and accounts payable
were informed by their anticipated effects on the company's
external free cash flow and/or non-GAAP operating margin targets.
The resulting actions generally served to reduce reported free cash
flow and/or lower reported margin in the current period. Though
free cash flow was one factor in the company's executive
compensation program, these decisions were not calculated to
influence compensation outcomes.
The Audit Committee proposed certain remedial measures
including: reviewing certain processes around financial
communications and disclosures; assessing certain company
organizational functions and responsibilities; and adopting and
enhancing policies and processes related to the matters
investigated.
Separate from the Audit Committee's findings, the company notes
that multiyear upfront billings of enterprise customers in fiscal
year 2024 was substantially lower than fiscal years 2022 and
2023.
Preliminary results for first quarter fiscal 2025 and
business outlook
Autodesk also announced preliminary results for the first
quarter fiscal 2025 and business outlook as follows:
First Quarter Fiscal 2025 Preliminary Results
|
Q1 FY25
(ending April 30, 2024)
|
Revenue
|
approximately $1.42
billion
|
GAAP diluted
EPS
|
approximately
$1.16
|
Non-GAAP diluted EPS
(1)
|
approximately
$1.87
|
(1) Non-GAAP earnings per diluted share excludes approximately
$0.69 related to stock-based
compensation expense, $0.05 and
$0.07 for the amortization of
purchased intangibles and developed technologies, respectively,
$0.07 for acquisition-related costs,
and $0.02 for valuation allowance on
deferred tax assets, partially offset by ($0.19) related to GAAP-only tax charges.
Business Outlook
The following are forward-looking statements based on current
expectations and assumptions, and involve risks and uncertainties,
some of which are set forth below under "Safe Harbor Statement."
Autodesk's business outlook for the second quarter and full-year
fiscal 2025 considers the current economic environment and foreign
exchange currency rate environment. A reconciliation between the
fiscal 2025 GAAP and non-GAAP estimates is provided below.
Second Quarter Fiscal 2025
Q2 FY25 Guidance
Metrics
|
Q2 FY25
(ending July 31, 2024)
|
Revenue (in
millions)
|
$1,475 -
$1,490
|
EPS GAAP
|
$1.12 -
$1.18
|
EPS non-GAAP
(1)
|
$1.98 -
$2.04
|
(1) Non-GAAP earnings per diluted share excludes $0.80 related to stock-based compensation
expense, $0.15 for the amortization
of both purchased intangibles and developed technologies, and
$0.07 for acquisition-related costs,
partially offset by ($0.16) related
to GAAP-only tax charges.
Full Year Fiscal 2025
FY25 Guidance
Metrics
|
FY25
(ending January 31, 2025)
|
Billings (in
millions)
|
$5,810 -
$5,960
Up 12% - 15%
|
Revenue (in millions)
(1)
|
$5,990 -
$6,090
Up 9% - 11%
|
GAAP operating
margin
|
21% - 22%
|
Non-GAAP operating
margin (2)
|
35% - 36%
|
EPS GAAP
|
$4.71 -
$4.93
|
EPS non-GAAP
(3)
|
$7.99 -
$8.21
|
Free cash flow (in
millions) (4)
|
$1,430 -
$1,500
|
(1) Excluding the impact of foreign currency exchange rates and
hedge gains/losses, revenue guidance range would be approximately 1
percentage point higher.
(2) Non-GAAP operating margin excludes approximately 11% related
to stock-based compensation expense, approximately 2% for the
amortization of both purchased intangibles and developed
technologies, and approximately 1% related to acquisition-related
costs.
(3) Non-GAAP earnings per diluted share excludes $3.16 related to stock-based compensation
expense, $0.57 for the amortization
of both purchased intangibles and developed technologies, and
$0.20 related to acquisition-related
costs, partially offset by ($0.65)
related to GAAP-only tax charges.
(4) Free cash flow is cash flow from operating activities less
approximately $30 million of capital
expenditures.
The second quarter and full-year fiscal 2025 outlook assume a
projected annual effective tax rate of 21 percent and 19 percent
for GAAP and non-GAAP results, respectively. Shifts in geographic
profitability continue to impact the annual effective tax rate due
to significant differences in tax rates in various jurisdictions.
Therefore, assumptions for the annual effective tax rate are
evaluated regularly and may change based on the projected
geographic mix of earnings.
Safe Harbor Statement
This press release contains forward-looking statements that
involve risks and uncertainties, including statements regarding our
preliminary first quarter fiscal 2025 results, statements in the
paragraphs under "Business Outlook" above, statements about our
short-term and long-term goals, statements regarding our
strategies, market and product positions, performance and results,
and all statements that are not historical facts. There are a
significant number of factors that could cause actual results to
differ materially from statements made in this press release,
including: any adjustments that could be made prior to filing our
annual report on Form 10-K and announcing our first quarter fiscal
2025 results, the risk that the completion and filing of the Form
10-K will take longer than expected; our strategy to develop and
introduce new products and services and to move to platforms and
capabilities, exposing us to risks such as limited customer
acceptance (both new and existing customers), costs related to
product defects, and large expenditures; global economic and
political conditions, including foreign exchange headwinds,
recessionary fears, supply chain disruptions, resulting
inflationary pressures and hiring conditions; costs and challenges
associated with strategic acquisitions and investments; dependency
on international revenue and operations, exposing us to significant
international regulatory, economic, intellectual property,
collections, currency exchange rate, taxation, political, and other
risks, including risks related to the war against Ukraine launched by Russia and our exit from Russia; inability to predict subscription
renewal rates and their impact on our future revenue and operating
results; existing and increased competition and rapidly evolving
technological changes; fluctuation of our financial results, key
metrics and other operating metrics; our transition from up front
to annual billings for multi-year contracts; deriving a substantial
portion of our net revenue from a small number of solutions,
including our AutoCAD-based software products and collections; any
failure to successfully execute and manage initiatives to realign
or introduce new business and sales initiatives; net revenue,
billings, earnings, cash flow, or new or existing subscriptions
shortfalls; social and ethical issues relating to the use of
artificial intelligence in our offerings; our ability to maintain
security levels and service performance meeting the expectations of
our customers, and the resources and costs required to avoid
unanticipated downtime and prevent, detect and remediate
performance degradation and security breaches; security incidents
or other incidents compromising the integrity of our or our
customers' offerings, services, data, or intellectual property;
reliance on third parties to provide us with a number of
operational and technical services as well as software; our highly
complex software, which may contain undetected errors, defects, or
vulnerabilities; increasing regulatory focus on privacy issues and
expanding laws; governmental export and import controls that could
impair our ability to compete in international markets or subject
us to liability if we violate the controls; protection of our
intellectual property rights and intellectual property infringement
claims from others; the government procurement process;
fluctuations in currency exchange rates; our debt service
obligations; and our investment portfolio consisting of a variety
of investment vehicles that are subject to interest rate trends,
market volatility, and other economic factors. Our estimates as to
tax rate are based on current tax law, including current
interpretations of the Tax Cuts and Jobs Act, and could be affected
by changing interpretations of that Act, as well as additional
legislation and guidance around that Act.
Further information on potential factors that could affect the
financial results of Autodesk are included in Autodesk's Form 10-K
and subsequent Forms 10-Q, which are on file with the U.S.
Securities and Exchange Commission. Autodesk disclaims any
obligation to update the forward-looking statements provided to
reflect events that occur or circumstances that exist after the
date on which they were made.
About Autodesk
The world's designers, engineers, builders, and creators
trust Autodesk to help them design and make anything. From the
buildings we live and work in, to the cars we drive and the bridges
we drive over. From the products we use and rely on, to the movies
and games that inspire us. Autodesk's Design and Make Platform
unlocks the power of data to accelerate insights and automate
processes, empowering our customers with the technology to create
the world around us and deliver better outcomes for their business
and the planet. For more information,
visit autodesk.com or follow @autodesk.
#MakeAnything
Autodesk is a registered trademark of Autodesk, Inc., and/or
its subsidiaries and/or affiliates in the USA and/or other countries. All other brand
names, product names or trademarks belong to their respective
holders. Autodesk reserves the right to alter product and services
offerings, and specifications and pricing at any time without
notice, and is not responsible for typographical or graphical
errors that may appear in this document.
© 2024 Autodesk, Inc. All rights reserved.
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SOURCE Autodesk, Inc.