More involved in clients’ work
Design software maker Autodesk (ADSK) has entered an agreement to work jointly with Surbana Jurong to promote the adoption of advanced technology in the construction sector. Based in Singapore, Surbana Jurong is a leading Asian consultancy firm focused on infrastructure and urban development.
Surbana Jurong is owned by Temasek, an investment company that has invested in many startups including Ant Financial. Alibaba (BABA) is in the process of swapping its profit share in Ant Financial for a ~30% equity stake in the business. The agreement to collaborate with Surbana Jurong comes at a time when Autodesk has said that its long-term goal is to go beyond selling design software to becoming more involved in its customers’ work processes.
Transition to subscription model
Like Adobe Systems (ADBE) and Microsoft (MSFT), Autodesk is underway with its transition to a subscription business model where it delivers its software over the Internet rather than selling perpetual software licenses. This transition should lead to Autodesk generating more recurring revenue. Autodesk’s subscription annualized recurring revenue soared 112% YoY (year-over-year) to $1.7 billion in its fiscal 2019 second quarter, which ended in August. About 2.0 million Autodesk customers have yet to upgrade to subscription plans so have yet to contribute to the company’s subscription recurring revenue.
Revenue rose nearly 22%
Autodesk’s total revenue for the quarter was up 21.9% YoY to $611.7 million. Adobe, Microsoft, and SAP SE (SAP) posted revenue growth of 24.4%, 17.5%, and 3.8% YoY, respectively, in their most recent quarters.