Autodesk stockholders may have breathed a sigh of relief after the company released last quarter’s results as the revenue shot up 8 percent, following a calamitous drop of over $136 million from the previous quarter. However, the company is still losing money, racking up another $98 million in losses for Q2 2016.
An industry-leading vendor that’s struggling would not ordinarily be a good indicator for the health of the overall industry, but in the case of Autodesk, the troubles are self-inflicted. Autodesk has chosen to embrace a subscription-based model and is migrating its users away from perpetual licenses. Monthly subscriptions have provided the company with less revenue, certainly less than in quarters when the company could count on major upgrades for revenue spikes. Also, it doesn’t help that many of the new products Autodesk has introduced are priced between free and hundreds of dollars, rather than the thousands of dollars that each new license used to bring.
Autodesk has said that it was necessary to “modernize” the business model and catch up to current software pricing trends. The company—and everyone else—expected an earnings hit to occur for a few quarters, until customers got used to the new subscription model. Though there has been some visible consternation among the company’s user base, it would appear that, collectively, the architectural and engineering contingent may be among the biggest holdouts for perpetual licensing of any software user segment. Still, after several quarters, there has been no indication that customers are leaving the Autodesk fold in any significant numbers.
Lest you worry that Autodesk is going to fail, the company still has almost $1.5 billion in cash and cash equivalents, which is a little more in assets than it had six months ago. And the money it is owed—accounts receivable—has shot up to $347 million from $64 million in the same period last year.
Autodesk CEO Carl Bass calls the Q2 results “terrific.” Wall Street analysts seemed to be surprised, having expected the company to make only a little over $500 million this quarter.
See the press release and financial table here.