Raises Guidance for Fiscal 2007
First quarter net income was $49 million, or $0.20 per diluted share on a GAAP basis and $80 million, or $0.32 per diluted share on a non-GAAP basis. Current quarter non-GAAP net income excludes stock based compensation expenses, litigation expenses and amortization of purchased intangibles. Net income in the first quarter of the prior year was $76 million, or $0.31 per diluted share on a GAAP basis, and $75 million, or $0.30 per diluted share on a non-GAAP basis.
"Autodesk had an excellent quarter," said Carl Bass, Autodesk president and CEO. "We drove strong growth across our portfolio of businesses including record results on a number of our most important financial metrics. We continued the rapid integration of Alias into Autodesk, and in March, we launched our 2007 family of products, including more than 25 new releases."
Autodesk's performance was driven by strong growth in revenue from new seats, subscriptions, and emerging economies, as well as increasing penetration of its 3D products.
Revenue from new seats, including the company's 2007 family of products, increased by 19 percent compared to the first quarter of last year. Revenue from new seats was driven by strong growth in 3D and vertical products. Revenue from new seats of 3D increased 50% over last year. Revenue from new seats of Autodesk Building Systems, the AutoCAD-based solution for mechanical, electrical and plumbing engineers, increased more than 130% over the first quarter of last year. Revenue from new seats and emerging businesses continues to represent approximately two-thirds of total revenues.
Combined subscription and upgrade revenue increased 36 percent over last year to $162 million. Record subscription attach and renewal rates drove a 47 percent increase in subscription revenue compared to the first quarter of last year to $87 million. Deferred subscription revenue increased $39 million sequentially, the highest quarterly increase ever. Upgrade revenue increased 25 percent over last year to $75 million. Combined revenues from subscription and upgrades continue to represent approximately one-third of total revenues.
The company's 3D products, Inventor, Revit and Civil 3D, continue to increase their market penetration. In the first quarter of fiscal 2007, combined revenues from the company's 3D products increased 53 percent over the prior year. The Revit family of products had a particularly strong quarter shipping more than 13,100 commercial seats and increasing revenue 145 percent over last year. In March, the company completed the Revit family of building information modeling solutions by launching Revit Systems which introduces building information modeling for mechanical, electrical and plumbing engineers and designers. Civil 3D also had a very strong quarter increasing revenue 123 percent over the first quarter of last year. In the first quarter of fiscal 2007, total 3D revenue represented 20% of total revenues.
With significant development of infrastructure underway, and rapidly developing consumer classes, emerging economies continue to be an area of robust growth for Autodesk. Revenue from the emerging economies in Asia Pacific, Eastern Europe, Latin America and the Middle East increased 40 percent over last year and represented 12 percent of total revenue in the first quarter.
"Our business strategy and strong product position enable us to benefit from important business trends including the increasingly globalized nature of business, the rise of emerging economies, the massive worldwide development and repair of infrastructure, and the increased desire for sustainable or "green" design," said Bass. "Our business is sound, and we are increasing our business outlook to reflect the current environment."
The following statements are forward looking statements which are based on current expectations and which involve risks and uncertainties some of which are set forth below.
Second Quarter Fiscal 2007
Net revenues for the second quarter of fiscal 2007 are expected to be between $440 and $450 million. GAAP earnings per diluted share are expected to be between $0.26 and $0.28. Non-GAAP earnings per diluted share are expected to be between $0.34 and $0.36 and exclude $0.07 related to stock based compensation expenses as required by SFAS 123R, and $0.01 for the amortization of acquisition related intangibles.
Full Year Fiscal 2007
For fiscal year 2007, net revenues are expected to be between $1.81 billion and $1.85 billion. GAAP earnings per diluted share are expected to be between $1.07 and $1.15. Non-GAAP earnings per diluted share are expected to be between $1.45 and $1.53. Non-GAAP earnings per diluted share exclude $0.29 related to stock based compensation expenses, $0.05 in litigation expense and $0.04 for the amortization of acquisition related intangibles.
Autodesk includes an assumption of a 24 percent effective tax rate for the remainder of fiscal 2007, as Congress has not yet renewed the federal Research and Development Tax Credit.
A reconciliation of the above non-GAAP measures to the corresponding GAAP amounts is provided at the end of this press release.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, including statements in the paragraphs under "Business Outlook" above, statements regarding our expected effective tax rate, anticipated market trends and other statements regarding our expected performance. Factors that could cause actual results to differ materially include the following: general market and business conditions, the timing and degree of expected investments in growth opportunities, slowing momentum in maintenance or subscription revenue, changes in the timing of product releases and retirements, continued fluctuation in foreign currency exchange rates, difficulties encountered in integrating the Alias business or in achieving expected earnings accretion, failure to successfully integrate other new or acquired businesses and technologies, failure to achieve sufficient sell-through in our channels for new or existing products, failure of key new applications to achieve anticipated levels of customer acceptance, pricing pressure, failure to achieve continued cost reductions and productivity increases, failure to achieve continued migration from 2D products to 3D products, unanticipated changes in tax rates and tax laws, mix of geographic earnings, unexpected outcomes of matters relating to litigation, failure to achieve continued success in technology advancements, the financial and business condition of our reseller and distribution channels, renegotiation or termination of royalty or intellectual property arrangements, interruptions or terminations in the business of the company's consultants or third party developers, failure to grow lifecycle management or collaboration products, and unanticipated impact of accounting for technology acquisitions.
Further information on potential factors that could affect the financial results of Autodesk are included in the company's report on Form 10-K for the year ended January 31, 2006, which is on file with the Securities and Exchange Commission. Autodesk does not assume 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.
This release and the accompanying financial statements include non-GAAP financial measures which are not prepared in accordance with generally accepted accounting principles. A full description of the non-GAAP financial measures and management's explanation for its use of such measures are set forth more particularly in the notes to the financial statements accompany this release.
Autodesk will host its first quarter earnings announcement today at 5:00 p.m. EDT. The live announcement may be accessed at 800-320-2978 or 617-614-4923 (passcode: 89919468). A replay of the call will be available at 7:00pm EDT on our website at www.autodesk.com/investors or by dialing 888-286-8010 or 617-801-6888 (passcode: 63765164). An audio webcast and podcast will also be available beginning at 5:00 p.m. EDT at www.autodesk.com/investors. This replay will be maintained on our website for at least twelve months.