All Sales of Perpetual Licenses to Cease By January 2017
Autodesk offered a progress report on its transition to a subscription-driven business model today, announcing the addition of 95,000 subscriptions in the fiscal quarter ending April 30, 2015. Approximately half of those subscriptions are new subscription types, the company said—desktop subscriptions, cloud subscriptions, and flexible licensing for enterprises—as opposed to maintenance subscriptions.
On a conference call with investors and analysts, Bass said the results were "above what our expectations were" in the quarter.
That brings Autodesk's total number of subscriptions to 2.33 million. But it's too soon to tell how Autodesk's end users are reacting to the move, executives said, noting that the company's channel partners are now preparing for the transition, with customers becoming more aware of the implications over the next three quarters. "It will be another month or two until we really see what the reactions from customers are," Bass said. "We have a number of models [and] a number of knobs and levers to move during the year" to adjust to customer response, Bass said.
That means the next fiscal year, which begins February 1, 2016 will be a pivotal year for the company—Bass described it as a probable "low point" for revenues, noting that perpetual licensing for Autodesk suites will cease entirely at some point before January 31, 2017. A rebound is expected to take place after that happens, Bass said, as the company's income statements reflect the increased recurring revenue that should come alongside the disappearance of big up-front payments.
Media and Entertainment remains by far the smallest of Autodesk's business segments, accounting for just $40 million (or 6.2%) of $647 in quarterly revenue, but the segment did grow by 6% over the year-ago period, Autodesk said. Total revenue for the company was up 9 percent year-over-year, but net income fell to $19.1 million from $28.3 million in the year-ago period. Autodesk's stock was down a couple of points in after-hours trading this afternoon.
