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Subscription Plan ARR Remains Key to Autodesk’s Business

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What’s driving total ARR?

Autodesk’s (ADSK) total annualized recurring revenue (or ARR) has continued to see strong momentum in the last five quarters buoyed by robust growth in its subscription plan ARR. However, this momentum has been slightly offset by a fall in its maintenance plan ARR.

Since June 2017, the company has gradually been shifting its maintenance plan customers toward its subscription plan offerings. Such a move has resulted in strong growth in its subscription plan ARR. Moreover, an increase in subscription plan types triggered by product subscriptions has led to solid growth in ADSK’s total ARR.

In the graph above, we can see the growth in Autodesk’s total ARR over the last five quarters. It continues to witness an increasing trend. In the last five quarters, the company’s total ARR has risen at a CAGR (compound annual growth rate) of 6%.

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Factors influencing ARR growth outlook

In fiscal 4Q18, Autodesk’s total ARR came in at ~$2.1 billion, up 25% YoY (year-over-year), whereas in fiscal 2018, it stood at $7.5 billion. The company also witnessed a 20% YoY rise in its ARR across all three geographies in fiscal 4Q18.

The leading 3D design and engineering provider expects its total ARR in fiscal 2019 to rise 30% compared to fiscal 2018. A strong partnership with leading technology distributor Tech Data Corporation (TECD) and the launch of different cloud-based graphics software may act as strong catalysts for the company’s total ARR growth going forward.

Autodesk’s subscription plan ARR in fiscal 4Q18 climbed 106% YoY to nearly $1.2 billion. Its maintenance plan ARR fell 18% YoY to $879 million mainly due to the shifting of maintenance plan subscriptions to product subscriptions.

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