Autodesk Inc. (ADSK:US), a maker of architectural and engineering software, said billings will rise at an average annual rate of 12 percent through fiscal 2018 as the company shifts to selling more software subscriptions.
Autodesk, which currently has 1.9 million subscribers, expects a 50 percent increase in that number through fiscal 2018, Andrew Anagnost, senior vice president of industry strategy and marketing, said in an interview ahead of the company’s investor day today.
The San Rafael, California-based company last month introduced subscription versions of some of its most expensive software. The move reflects a broader trend across the software industry, which is shifting toward subscription payments for online and desktop software as consumers and businesses seek access to a steady stream of new features instead of being stuck with one version of a software package.
Autodesk is facing declining sales and profit (ADSK:US) this year. The change will make it easier and cheaper for customers using old versions of the company’s products and will attract new consumers, Anagnost said.
“A customer that comes and joins as a renter is much more valuable over a number of years,” he said.
The company today also reiterated its third-quarter guidance and said it projects fourth-revenue of $560 million to $580 million and earnings per share of 9 cents to 16 cents. That was below analysts’ estimates of fourth-quarter revenue of $603.4 million and earnings of 29 cents, according to data (ADSK:US) compiled by Bloomberg.
Autodesk shares rose 5.1 percent to $42.55 at the close in New York. The stock (ADSK:US) has gained 20 percent this year.
Autodesk has many customers who are on older products, he said. While some pay a maintenance fee, that’s smaller than the annual rental fee for the new Internet-based versions.
Selling more Internet-based services may increase costs because they are generally more expensive to deliver, Anagnost said, yet the company expects that to “wash out” as Autodesk gets more users for the services.
Autodesk’s sales are projected to decline 1 percent to $2.28 billion (ADSK:US) for the current fiscal year that runs through January, according to data compiled by Bloomberg.
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