Autodesk struggles with cloud turn, to restructure after weak Q2

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


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.


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.