Item 2.02. Results of Operations and Financial Condition.
On November 22, 2022, Autodesk, Inc. (“Autodesk” or the “Company”) issued a
press release reporting financial results for the third fiscal quarter ended
October 31, 2022. The press release is furnished herewith as Exhibit 99.1 and is
incorporated herein by reference.
The exhibit shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
Key Performance Metrics
In order to help better understand Autodesk’s financial performance, Autodesk
uses several key performance metrics including billings, recurring revenue, and
net revenue retention rate (“NR3”). These metrics are key performance metrics
and should be viewed independently of revenue and deferred revenue as these
metrics are not intended to be combined with those items. Autodesk uses these
metrics to monitor the strength of its recurring business. Autodesk believes
these metrics are useful to investors because they can help in monitoring the
long-term health of Autodesk’s business. Autodesk’s determination and
presentation of these metrics may differ from that of other companies. The
presentation of these metrics is meant to be considered in addition to, not as a
substitute for or in isolation from, Autodesk financial measures prepared in
accordance with GAAP.
Non-GAAP Financial Measures
To supplement Autodesk’s condensed consolidated financial statements presented
on a GAAP basis, the press release furnished herewith as Exhibit 99.1 provides
investors with certain non-GAAP measures, including but not limited to
historical non-GAAP net earnings and historical and future non-GAAP net earnings
per diluted share. For Autodesk’s internal budgeting and resource allocation
process and as a means to evaluate period-to-period comparisons, Autodesk uses
non-GAAP measures to supplement its condensed consolidated financial statements
presented on a GAAP basis. These non-GAAP measures do not include certain items
that may have a material impact upon Autodesk’s reported financial results.
Autodesk uses non-GAAP measures in making operating decisions because Autodesk
believes those measures provide meaningful supplemental information for
management regarding the Company’s earning potential and performance by
excluding certain expenses and charges that may not be indicative of the
Company’s core business operating results. For the reasons set forth below,
Autodesk believes that these non-GAAP financial measures are useful to investors
both because (1) they allow for greater transparency with respect to key metrics
used by management in its financial and operational decision-making and (2) they
are used by Autodesk’s institutional investors and the analyst community to help
them analyze the health of the Company’s business. This allows investors and
others to better understand and evaluate Autodesk’s operating results and future
prospects in the same manner as management, compare financial results across
accounting periods and to those of peer companies, and to better understand the
long-term performance of its core business. Autodesk also uses some of these
measures for purposes of determining company-wide incentive compensation.
As described above, Autodesk may exclude the following items, as applicable,
from its non-GAAP measures:
A. Stock-based compensation expenses. Autodesk excludes stock-based compensation
expenses from its non-GAAP measures primarily because they are non-cash expenses
and management finds it useful to exclude certain non-cash charges to assess the
appropriate level of various operating expenses to assist in budgeting,
planning, and forecasting future periods. Moreover, because of varying available
valuation methodologies, subjective assumptions and the variety of award types
that companies can use under FASB ASC Topic 718, Autodesk believes that
excluding stock-based compensation expenses allows investors to make meaningful
comparisons between its recurring core business operating results and those of
B. Amortization of developed technologies and purchased intangibles. Autodesk
incurs amortization of acquisition-related developed technology and purchased
intangibles in connection with acquisitions of certain businesses and
technologies. Amortization of developed technologies and purchased intangibles
is inconsistent in amount and frequency and is significantly affected by the
timing and size of Autodesk’s acquisitions. Management finds it useful to
exclude these variable charges from our cost of revenues to assist in budgeting,
planning and forecasting future periods. Investors should note that the use of
intangible assets contributed to our revenues earned during the periods
presented and will contribute to Autodesk’s future period revenues as well.
Amortization of developed technologies and purchased intangible assets will
recur in future periods.
C. CEO transition costs. Autodesk excludes amounts paid to the Company’s former
CEOs, upon departure under the terms of their transition agreements, including
severance payments, acceleration of restricted stock units, and continued
vesting of performance stock units, and legal fees incurred with the transition.
Also excluded from Autodesk’s non-GAAP measures are recruiting costs
related to the search for a new CEO. These costs represent non-recurring
expenses and are not indicative of Autodesk’s ongoing operating expenses.
Autodesk further believes that excluding the CEO transition costs from its
non-GAAP results is useful to investors in that it allows for period-over-period
D. Goodwill impairment. This is a non-cash charge to write down goodwill to fair
value when there was an indication that the asset was impaired. As explained
above, management finds it useful to exclude certain non-cash charges to assess
the appropriate level of various operating expenses to assist in budgeting,
planning, and forecasting future periods.
E. Restructuring and other exit costs, net. These expenses are associated with
realigning Autodesk’s business strategies based on current economic conditions.
In connection with these restructuring actions or other exit actions, Autodesk
recognizes costs related to termination benefits for former employees whose
positions were eliminated, the closure of facilities, and cancellation of
certain contracts. Autodesk excludes these charges because these expenses are
not reflective of ongoing business and operating results. Autodesk believes it
is useful for investors to understand the effects of these items on its total
F. Lease-related asset impairments and other charges. These charges are
associated with the optimization of Autodesk’s facilities costs related to
leases that Autodesk recently vacated as a result of Autodesk’s one-time move to
a more hybrid remote workforce. In connection with these facility leases,
Autodesk recognizes costs related to the impairment or abandonment of operating
lease right-of-use assets, computer equipment, furniture, and leasehold
improvements, and other costs. Autodesk excludes these charges because these
expenses are not reflective of ongoing business and operating results. Autodesk
believes it is useful for investors to understand the effects of these items on
Autodesk’s total operating expenses.
G. Acquisition-related costs. Autodesk excludes certain acquisition-related
costs, including due diligence costs, professional fees in connection with an
acquisition, certain financing costs, and certain integration-related expenses.
These expenses are unpredictable, and dependent on factors that may be outside
of Autodesk’s control and unrelated to the continuing operations of the acquired
business or Autodesk. In addition, the size and complexity of an acquisition,
which often drives the magnitude of acquisition-related costs, may not be
indicative of such future costs. Autodesk believes excluding
acquisition-related costs facilitates the comparison of its financial results to
the Autodesk’s historical operating results and to other companies in its
H. Loss (gain) on strategic investments and dispositions. Autodesk excludes
gains and losses related to its strategic investments and dispositions of
strategic investments, purchased intangibles, and businesses from its non-GAAP
measures primarily because management finds it useful to exclude these variable
gains and losses on these investments and dispositions in assessing Autodesk’s
financial results. Included in these amounts are non-cash unrealized gains and
losses, dividends received, realized gains and losses on the sales or losses on
the impairment of these investments, and gain and loss on dispositions. Autodesk
believes excluding these items is useful to investors because these excluded
items do not correlate to the underlying performance of its business and these
losses or gains were incurred in connection with strategic investments and
dispositions which do not occur regularly.
I. Discrete tax provision items. Autodesk excludes the GAAP tax provision,
including discrete items, from the non-GAAP measure of net income (loss), and
includes a non-GAAP tax provision based upon the projected annual non-GAAP
effective tax rate. Discrete tax items include income tax expenses or benefits
that do not relate to ordinary income from continuing operations in the current
fiscal year, unusual or infrequently occurring items, or the tax impact of
. . .
Item 7.01. Regulation FD Disclosures.
On November 22, 2022, Autodesk posted supplemental investor materials on its
investors.autodesk.com website. Autodesk uses its investors.autodesk.com website
as a means of disclosing material non-public information, announcing upcoming
investor conferences and for complying with its disclosure obligations under
Regulation FD. Accordingly, investors should monitor Autodesk’s investor
relations website in addition to following Autodesk’s press releases, SEC
filings and public conference calls and webcasts.
The information in this current report on Form 8-K and the exhibit attached
hereto shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 99.1 Press release dated as of November 22, 2022 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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