Autodesk struggles with cloud turn, to restructure after weak Q2

Autodesk struggles with cloud turn, to restructure after weak Q2

Summary: "It's clear to us that design and engineering software will move to cloud and mobile platforms," says Autodesk CEO after weak second quarter.

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Autodesk missed second quarter sales expectations by a wide margin and the company said it would restructure and lock down expenses as it tried to position its business better for cloud computing.

The design and engineering software maker reported second quarter earnings of 28 cents a share on revenue of $569 million, up 4 percent from a year ago. Non-GAAP earnings were 48 cents a share. Wall Street was expecting second quarter earnings of 49 cents a share on revenue of $593 million.

That sales miss translated into Autodesk shares plunging 21 percent in afterhours trading.

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In addition, the third quarter outlook wasn't good either. Autodesk projected non-GAAP third quarter earnings of 40 cents a share to 45 cents a share on revenue of $550 million to $570 million.

Wall Street was expecting third quarter earnings of 50 cents a share on revenue of $601 million.

Autodesk CEO Carl Bass said the company was hit with "our own execution challenges, combined with an uneven global economy." The company has reorganized to focus more on cloud computing, but that move apparently hurt sales.

What's next? Autodesk, best known for its AutoCAD software,  said it will:

  • Cut jobs, but spend on cloud computing and mobility products.
  • Consolidate leased facilities.
  • Cut back on non-sales travel expenses and the number of contractors.

Bass added:

This restructuring is squarely focused on our continued transformation and shift to more cloud and mobile computing. This action allows us to continue to invest in recruiting and hiring people who can bring Autodesk the skills and experience that are critical for achieving our mid and long-term goals. As part of the ongoing platform shift, it's clear to us that design and engineering software will move to cloud and mobile platforms. Cloud and mobile has been a major investment area for Autodesk over the past couple of years and this restructuring will accelerate our progress as we intend to further invest in employees with expertise and skill sets essential to this transition.

Update: Autodesk took issue with the cloud struggles headline. A spokesman said:

The headline suggested we are struggling with the cloud. Not true. Our execution issues in the second quarter were related to a re-org that we did earlier in the year. The re-org involved us moving to an industry-focused sales organization. It slowed us down. With many employees taking on new roles, new customers, new managers, and teams, the amount and level of change has been significant. These changes were absolutely necessary and the right thing to do but in the short-term it has resulted in slow decision making and confusion affecting our sales and marketing activities.

We are just taking our initial steps towards the cloud. Our hope is that our the restructuring announced today will accelerate that.

Topics: Cloud, Enterprise Software

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3 comments
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  • LOL

    AutoCAD in the cloud. Yeah...that multigigabyte application that is probably responsible for more Quadro GPU sales than basically anything else? Yeah...because running that in a browser sounds appealing.

    I have a different set of thoughts...

    1.) The AutoCAD suite has been 'good enough' for many years.
    2.) Autodesk's DRM is more headache-inducing than virtually any other software I've used.
    3.) The software is incredibly expensive.
    4.) All of the above, together.

    I'm not sure that the fact that they're not in the cloud is the problem - on the contrary, many architects I know prefer their machines stay offline. When software is prohibitively expensive, people don't buy it - and the people who do buy it, don't buy annual upgrades.

    Joey
    voyager529
  • Autodesk 360 cloud app

    To answer your concerns in a wider perspective:

    1. Autodesk has been acquiring other companies for years now, adding functionality to its suites. http://en.wikipedia.org/wiki/Autodesk has a long list of corporate acquisitions. Even as an international design standard, they do have to compete - primarily with Dassault Systèmes, makers of Solidworks. Some say they are losing that competition.

    2. Have you ever tried wrestling with DRM of Rockwell Automation software? By comparison, Autodesk is simple, helpful, and open. Before its recent (~8 years) tightening of license management, AutoCAD was massively pirated software, although most pirates didn't know how to use it.

    3. So is its competitor's offerings, even moreso. It is credibly expensive. It also brings you credibility to use industry standard professional tools.

    4. There *are* alternatives. Dassault offers DraftSight, a free 2D drafting tool. Many others are out there also. Most everything accepts import and export to .DWG and .DXF file standards.

    The cloud app uses the processing power of the cloud to display complex images simply for tablets and more. I feel that touch inputs are restrictive on use for design, but it would work well for presentation or site visits, and should eventually be a great tool for using geolocation to implement an augmented reality view (view that building design on site when looking at its vacant lot). I do not use it, but have learned how to.

    The best feature of their cloud app is that you can let their processors render your animated walkthrough presentation instead of occupying a dedicated workstation or two for a day or more to render complex image sequences. If I was doing that task, this feature alone would sell me on their cloud service. Besides, I believe that it is included with Subscription Services (see below).

    As for annual upgrades, if you are going to be using the software among vendors' and clients' data, you will need to stay reasonably current, within 3 to 4 years. It is a business expense, and an expected one for professionals. Complaining about price or using free alternatives make your business look very 'Mickey Mouse' to clients. Also, by using Subscription Service licensing (on full suites - not AutoCAD LT), you pay a yearly fee that gets you expanded training, support, and each year's software release. And! It costs less than full suite replacement within 5 years. This is useful to professionals who look for business continuity.

    Although they release new versions each year now, the file standard only changes every 3 to 5 years. Old software will work just fine until a client expects you to produce or receive the new file standard.

    Some engineering houses have developed custom add-ons that require an older version. These companies are realistically not going to redevelop their tools unless there is a significant ROI. Autodesk knows this, and you can always disable current UI and tools so that you can draft like it's the 80's: CGA graphics and all. Emerging file standards still need new versions to work, even if the interface is dumbed down to older versions.

    Your concerns are already recognized by Autodesk. They have created sales and support options to address them professionally, even if they are unacceptable to you. (Then don't use it.)
    Solenoid
  • Now this happens when the managment loses grip with their Users.

    I ´m an Autodesk customer for nearly 2 decades. This year we canceled all our subscriptions for several reasons.

    First of all Autodesk wastes huges amounts of money for features their User simply don´t like.
    For example the Ribbon interface, the caddies, the jewel button. All features that are
    less capable compared to the Old UIs, took years to develop without any value for the User.
    One must be really of track to think the Ribbon is a modern UI.

    You could easily go back 5-6 or more versions of their software
    without missing something. Innovation and development within Autodesk more or less
    doesn´t exist. They buy companies and implement their technology in a way that it just can be
    called a tech. demonstration. But never a usuable feature for our commercial work. All these
    different technologies also do not play together very well and do not evolve over the years.
    In some parts older versions are even better performing than newer versions.

    Also the cloud nonsense scared of quite some Users.
    People in the Engineering or Entertainment Sector usualy have NDA´s that dissalows
    storing their data outside the company. Mr. Carl Brass obviously has no idea about
    the amount of Data we are talking about. A rendering project can easily take several
    dozens of Gigabyte. It´s simply utter nonsense from a person who has no idea what
    his customers are doing.

    The next point is pricing and suites. They raised the subscriptions fees by 40% while
    removing half of the features that were promised to their subscription customers. Those
    other half of the features are only available to suites customers. It shouldn´t
    be to hard to understand for Autodesk that a customer won´t pay twice the price for 3
    pieces of software that basically do all exactly the same. Last year we got half a dozen
    calls from autodesk about buying their suites. Seems like those are not doing very well.

    People feel ripped off by Autodesk. It has become the most unsexy and greedy company
    over the last years. Also while Autodesk is thinking hard how to get more money from their
    customers their competitors think about how to improve their products. That´s the reason
    why Autodesk is struggling not the Economic crysis at the moment. People are running
    away from them because their products are not as shinny as their marketing suggests.

    If Autodesk would have spend half the money they spend in buying other companies
    actually in development, their software would be now probabely twice as good.

    The best would be if Carl Brass resignes and someone steps up who has a clue about the
    needs of Autodesk Customers. But what do I care, we´re out. We moved to companies
    like Maxon or SideFX who actually care about their customers and products.

    Dear Autodesk, you deserve this ! This is the result of bullshitting your customers.

    Also here is a nice example of what Users think about Autodesk.
    http://forums.cgsociety.org/showthread.php?f=6&t=1064055
    AlbertKK