by Jay Vleeschhouwer
Following on its product launch webcast of last evening, Autodesk today formally unveiled its regular annual product releases. The "2012" releases comprise its two largest standalone products – AutoCAD and AutoCAD LT – and of course the portfolio of manufacturing, AEC, and infrastructure products. These include the AutoCAD-based vertical products, as well as Inventor, Revit, Moldflow, NavisWorks, and so on.
The new “2012” products will commence shipping next month, and then the roll-out will continue thereafter depending on country and language.
Suites, Suites, Suites
The main news – and indeed the main thrust of the product strategy and main theme of the recent One Team Conference for the resellers – is suites. Autodesk unveiled Building Design Suite, Autodesk Design Suite. Infrastructure Design Suite, and Product Design Suite.
With respect to the suites, I would highlight the following:
The Adobe Effect. Autodesk has already had about a dozen or so suites in the market, producing FY11 revenues of $440 million, up 26% (including maintenance revenues). Adobe is often used – and rightly so – as a basis for comparison for Autodesk’s long-gestating suites strategy, especially given the massive impact that Creative Suite has had.
It’s interesting to note, though, that when Adobe launched Creative Suite in late 2003, the company had already been generating about 10%-15% of revenues from the predecessor “bundles” and “collections.” However, Creative Suite multiplied the suites revenue over the predecessor products, especially after the expansion and segmentation of the product line starting in 2007. Creative Suite revenues were nearly $1.3 billion in FY10 vs. combined Adobe/Macromedia suites revenues of about a quarter-billion dollars in 2003.
Autodesk already derived 22% of its revenues last year from suites – a higher starting point than Adobe’s – so it’s somewhat closer to being able to derive the bulk of the product revenues eventually from suites rather than standalone products. That would be consistent with empirical mix trends in the design software market.
Standard-Premium-Ultimate. Autodesk has taken the “classic” and correct approach of segmenting the suites by Standard, Premium, and Ultimate. The odds are that the mix will gravitate to the Premium/Ultimate configurations, just as we have seen with the mix of Creative Suite configurations. Design Premium alone probably does at least as much in annual revenues as Autodesk’s existing suites do combined. The same is true elsewhere in the CAD market, e.g., SolidWorks’ mix.
The richer mix will not only aid initial license ASPs [average selling price], but will also aid maintenance revenues, thus enhancing the existing trend of increasing average revenues per maintenance seat. We can infer that suites are already generating over $100 million a year in maintenance revenues, if the suites-maintenance/total-suites revenue ratio is at least comparable to the corporate average, which is likely the case.
Upsell, Cross-sell. In addition, given the size of the standalone products base, there is likely to be a considerable up-sell/cross-grade opportunity (just as Adobe did with Photoshop). While “installed base” is not necessarily (and is hardly ever for an older company) the same as the active base (via new units, upgrading and/or maintenance), it is worth pointing out that the bases (I infer) for standalone AutoCAD and vertical AutoCAD (i.e., Mechanical, Map, and Architecture) are about 3.1 million and 1.7 million, respectively, as of the end of FY11. In addition, the cumulative base for Revit may very well exceed 300,000 licenses, also as of the end of FY11.
Independent of the suites-centric launch event, the company’s 10K for FY11 has been filed. As always, there is a plethora of useful information:
Segment revenues. Net revenue for Platform Solutions increased 15% during fiscal 2011, primarily due to a 20% increase in revenue from the AutoCAD and AutoCAD LT products. From this we can deduce that standalone AutoCAD revenues were about $370 million and that “LT” revenues were around $285 million (both, therefore, are roughly at FY06 levels. Given Autodesk’s disclosed percentages, there are bound to be relatively minor $5-$10 million a year in rounding errors for these product inferences).
For fiscal 2011, revenue from model-based design products increased 18%, which follows the 19% decline in FY10.
Net revenue for Media & Entertainment increased 5% during fiscal 2011, primarily due to a 5% increase in Animation products (to about $133 million) and a 3% increase from Creative Finishing (to about $65 million). The increase in Animation revenue was primarily due to a 4% increase in revenue from Autodesk 3ds Max (to about $55 million, ). Importantly the M&E gross margin was around 78%, a vast improvement from the 55%-56% of five to six years ago (in absolute terms, this segment has contributed an incremental $58 million to gross profits as compared with FY06).
Units. During FY10, 29 points of the 44% decline in commercial new seat revenues was the result of unit declines; during FY11, 28 percentage points of the 31% increase in commercial new seat revenue was due to the increase in the number of seats sold, thus not fully recouping the drop during the recession. Still, Autodesk remains by far the highest volume supplier – and largest installed base supplier – in its peer group. Given its multiple addressed markets, and large installed base across the segments, there would seem to be a considerable “upsell” opportunity to the suites, just as Adobe has done with Creative Suite.
When we look at the data for FY09 – the last full year for which detailed product unit information was given – we can count over 700,000 new units of “design solutions” products; given the decline in FY10 and then rebound in FY11 we can infer that Autodesk very likely have shipped over a half-million new units, and perhaps closer to 600,000 new units, last year (plus another few tens of thousands of M&E products).
In the Manufacturing market, though, it appears that while Inventor rebounded well in FY11, it continues to trail Dassault’s SolidWorks in both new units and active maintenance paying base.
In FY11, the Americas had the fastest new seat revenue growth, at 33%, with Europe and Asia/Pacific tied with 24% new seat revenue growth last year; by contrast, in FY10, Europe had a 50% drop in new seat revenues, followed by a 38% drop in Asia/Pacific, and a 27% drop in the Americas.
Thus, over the past two years, the Americas has recovered the most ground in terms of new seat revenues, while Europe is, proportionately, the laggard; on the other hand, Europe is doing relatively well in terms of maintenance revenue comparisons.
Maintenance. The 10K indicates that maintenance billings increased by 14% last year, from which we can deduce that actual billings were around $825 million (during the recession year of FY10, billings had declined by 7%).
“The 7% increase in commercial maintenance revenue was due to a 5 percentage point increase in net revenue per maintenance seat and a 2 percentage point increase in commercial enrollment during the corresponding maintenance contract term. Commercial maintenance revenue represented 98% of maintenance revenue for both fiscal 2011 and 2010” (italics added). The aforementioned increase in net revenue per maintenance seat follows the 8% increase in FY10, thus underscoring an essential long-term mix-driven trend in the maintenance business. Commercial maintenance accounts for 98% of total maintenance revenue (notwithstanding the substantial adjustment Autodesk made in the total “subscriber” seat count a few years ago to take into account the educational seats).
Distribution. On the whole, the indirect channel accounts for 85% of Autodesk’s revenues, a fairly consistent proportion even as the number of larger deals (e.g., “national account”) has grown.
Tech Data accounted for 16% and 14% of total revenue during fiscal year 2011 and 2010; this proportion is up from 12% in FY07 (the four-year CAGR in Tech Data revenues to Autodesk would be about 9%). Thus, Tech Data remains the largest distribution partner globally; no other distributor accounted for more than 10% of the business. Though not mentioned in the 10K, the one partner that would come closest to that proportion would almost certainly be Mensch und Maschine, which has the second-largest share of revenues in Europe, Autodesk’s largest region by revenue.