Autodesk Management Discusses Q2 2013 Results - Earnings Call Transcript

Autodesk (ADSK)

Q2 2013 Earnings Call

August 23, 2012 5:00 pm ET


David Gennarelli

Carl Bass - Chief Executive Officer, President and Director

Mark Hawkins - Chief Financial Officer, Principal Accounting Officer and Executive Vice President


Sterling P. Auty - JP Morgan Chase & Co, Research Division

Kenneth Wong

Brendan Barnicle - Pacific Crest Securities, Inc., Research Division

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

Brent Thill - UBS Investment Bank, Research Division

Gregg Moskowitz - Cowen and Company, LLC, Research Division

Richard H. Davis - Canaccord Genuity, Research Division

Perry Huang - Goldman Sachs Group Inc., Research Division

Jay Vleeschhouwer - Griffin Securities, Inc., Research Division

Sitikantha Panigrahi - Crédit Suisse AG, Research Division

Daniel T. Cummins - ThinkEquity LLC, Research Division

Steve Koenig

Ross MacMillan - Jefferies & Company, Inc., Research Division

Melissa Gorham - Morgan Stanley, Research Division

Matthew Hedberg - RBC Capital Markets, LLC, Research Division

Blair Abernethy - Stifel, Nicolaus & Co., Inc., Research Division



Good afternoon. My name is Hope, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Fiscal Year 2013 Autodesk Earnings Conference Call. [Operator Instructions] Thank you. Mr. Gennarelli, you may begin your conference.

David Gennarelli

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss the results of our second quarter of fiscal 2013. Joining me today are Carl Bass, our Chief Executive Officer; and Mark Hawkins, our Chief Financial Officer.

Today's conference call is being broadcast live via webcast. In addition, a replay of the call will be available at As noted in our press release we have published our prepared remarks in 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 future performance of the company, such as our guidance for the third quarter and full year fiscal 2013, long-term financial model guidance, the factors we use to estimate our guidance, new products and suite releases and expected growth rates, expected cost savings from our restructuring and other cost management efforts, hiring plans, business execution, certain future strategic transactions, business prospects and financial results, our market opportunities and strategies, including our transition to cloud and mobile computing, trends in sales initiatives for our products and trends in various geographies and industries.

We caution you that such statements reflect our best judgment based 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 the fiscal year 2012, our form 10-Q for the period ending April 30, 2012, 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 actual results to differ from those contained in our forward-looking statements.

Forward-looking statements made during the call are being made as of today. If this call is replayed or viewed 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 the GAAP and non-GAAP results is provided in today's press release, prepared remarks and on the Investor Relations website. We will quote a number of numeric or growth changes as we discuss our financial performance and unless otherwise noted, each such reference represents a year-on-year comparison.

And now I'd like to turn the call over to Carl.

Carl Bass

Thanks, Dave. And good afternoon, everyone. Our second quarter results reflect execution issues stemming from our organizational realignment earlier this year, as well as continued unevenness in the economic environment. There are a few bright spots, but the reality is we missed our revenue targets on most fronts. Recall that last quarter, I spoke to you about a reorganization of our go-to-market activities. We organized our sales teams by industry to better serve our customers and drive future growth. We also made some adjustments to our channel programs, drawing on best practices from our various geographies. We can point to a mixed global economy for part of the explanation. But we did not execute as well as we would've liked on a number of fronts. It's clear that our reorganization and having people in different positions slowed us down in the quarter. With many employees taking on new roles, new customers, new managers and teams, the amount and level of change has been significant. And while the reorganization changes are important for the future, some degree of confusion and slower decision-making resulted, which affected the organization overall and our revenue results in particular.

As we track the progress of the quarter, the shortfall in revenue did not emerge until July, as our demand generation activities did not produce the anticipated effect. The organizational realignment, combined with an uneven economic environment, limited our ability to both identify the shortfall earlier and respond more quickly.

From a geographic perspective, the weakness we experienced in Southern Europe was not surprising. However, weakness in Central Europe was unforeseen. Although there was growth in the U.S., revenue growth in the Americas was well below what we've been experiencing over the past several quarters, due in large part to our results in Latin America. On the bright side, the Asia Pacific performed much better than the 2 other geographies. And in fact, the APAC had record revenues due to strong growth in Japan and China.

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