Autodesk is grasping cloud and mobile developments – and taking the inevitable pain that comes with cloud-based change. It is restructuring to take advantage of these two opportunities but the immediate impacts are the lowering of its annual sales forecast and job cuts - and a c23% drop in its share price in extended trading following the release of its Q2 results which showed the effect of the changes.
Having previously forecast annual revenue growth of 10%, the company has now cut this back to 4% to 6%, while the operating margin is expected to drop 2.1% instead of rising by 1.2%. It is not just the changes that are having a negative impact – slow economic recovery in Europe is also hampering sales (revenue from Europe fell 1%, vs. a 4% rise in the Americas.
For the quarter ending July 31 Autodesk reported a 4% YOY rise in revenue to $569m, and an operating margin of 16% vs 17%. Net income fell from $71.2m to $64.6m. Revenues from EMEA came in at $210m, 1% down on the year ago period. Although overall revenue was up,, including revenues from the Platform Solutions and Emerging Business segment and from Flagship products sales, the company said it missed its targets on almost fronts. This is starting to become a pattern – they may operate in different sectors but HP and Dell also posted results which revealed across the board declines (see HP Q3 – the picture says it all and Dell caught mid-leap).
Autodesk will be shedding jobs but part of the restructuring is about getting the people with the right expertise onboard so it will also be recruiting people with mobile and cloud skills. Success in the cloud and mobile environments does require vendors to rethink and rebalance in-house skills, which is something we highlighted in Breaking mobile market inhibitors. Autodesk is meeting the challenge but will carry the resulting pain for the rest of the financial year.