Autodesk Inc. (ADSK)

F3Q2011 Earnings Call Transcript

November 18, 2010 5:00 pm ET

Executives

Dave Gennarelli – Director, IR

Carl Bass – President and CEO

Mark Hawkins – EVP and CFO

Analysts

Brent Thill – UBS

Philip Winslow – Credit Suisse

Heather Bellini – ISI

Derek Bingham – Goldman Sachs

Michael Olson – Piper Jaffray

Steven Ashley – Robert W. Baird

Tim Wong [ph] – Citigroup

Steve Koenig – Longbow Research

Keith Weiss – Morgan Stanley

Ross MacMillan – Jefferies & Company

Israel Hernandez – Barclays Capital

Daniel Cummins – ThinkEquity

Sterling Auty – JPMorgan

Richard Davis – Canaccord Adams

Brendan Barnicle – Pacific Crest

Blair Abernethy – Stifel Nicolaus

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the third quarter 2011 Autodesk Incorporated earnings conference call. My name is Jennifer and I will be your operator for today. At this time, all lines are in a listen only mode. We will conduct a question-and-answer session towards the end of the conference. As a reminder this call is being recorded for replay purposes.

I would now like to hand the call over to Mr. Dave Gennarelli, Director of Investor relations. You may proceed, sir.

Dave Gennarelli

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss our third quarter of fiscal 2011. Joining me today are Carl Bass, our Chief Executive Officer; and Mark Hawkins, our Chief Financial Officer. Today's call is being broadcast live via webcast. In addition, a replay of the call will be available at autodesk.com/investor.

As noted in our press release, we have published our prepared remarks on our website in advance of this call. Those remarks are intended to serve in place of extended formal comments and we will not repeat them on this call. During the course of this conference call, we will make forward-looking statements regarding future events and the future performance of the Company, such as our guidance for the fourth quarter of fiscal 2011 and fiscal 2012, our five-year financial targets, the factors we use to estimate our guidance, our future strategic transactions, business prospects and financial results, our market opportunities and strategies, and trends and sales initiatives for our products and trends in various geographies and industries.

We caution you that such statements reflect our best judgment on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, specifically our Form 10-K for fiscal year 2010, our Form 10-Q for the quarters ended April 30 and July 31, 2010, and our periodic Form 8-K filings, including the Form 8-K filed with today's press release and prepared remarks. Those documents contain and identify important risks and other factors that may cause our actual results to differ from those contained in our forward-looking statements.

Forward-looking statements made during today's call are being made as of today. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Autodesk disclaims any obligation to update or revise any forward-looking statements. We will provide guidance on today's call, but we'll not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum.

During the call, we will also discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of GAAP and non-GAAP results is provided in today's press release, prepared remarks and on the Investor Relations section of our website.

In addition, on this call, we will discuss our five-year non-GAAP operating margin target. Autodesk is not able to provide a five-year GAAP operating margin target or reconciliation at this time because of the difficulty of estimating certain items that are excluded from the non-GAAP measure that affect operating margin, such as charges related to stock-based compensation expense and amortization of acquisition-related intangibles.

Now, I would like to turn the call over to Carl Bass.

Carl Bass

Thank you and good afternoon. We're pleased with our third quarter results, which reflect the progress we've achieved in the number of key categories. Year-over-year highlights included 14% growth in total net revenue, 33% growth in revenue from commercial new licenses, double-digit revenue growth in all of our geographies, revenue growth in all of our top countries, 23% non-GAAP EPS growth, and strong growth in cash flow from operating activities.

It's the first time in three years that all of our geographies recorded double-digit year-on-year growth and we were especially pleased to see the Americas return to this level of revenue growth. We continued to experience our strongest year-on-year growth rates from our international geographies, with APAC leading the way. Growth in APAC was highlighted by strong performance of our model-based design products for both the AEC and manufacturing markets.

Our manufacturing business experienced significant global growth. We continue to gain market share by winning nee customers, deepening account penetration and displacing our competitors with our digital prototyping portfolio including Autodesk Inventor at the core.

Our products offer a withstanding and easily understood value proposition for customers, enabling them to bring better products to market, thereby giving them a real competitive advantage in their markets. Accelerating progress in our largest addressable market has been very gratifying.

In the AEC market building information modeling or BIM continues to be a business driver. The adoption of BIM is increasing and we are seeing more and more instances in both the public and private sectors of BIM being mandated in the U.S. and abroad.

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