Facing the Storm as Autodesk Stock Plunges

Autodesk’s stock looks like it fell off the edge. Share prices were down 20% this morning. This after the recent Q3 announcement that the company lost $120 million.

You’ll be feeling bad if you are invested in Autodesk. You’ll be feeling worse if you were one of the 1150 Autodeskers being laid off. They were told last week.

One of them tries to put a brave face. She’s doing fine, she says. She is lifting her spirits with a friend over a salad at a trendy Hayes St. eatery in San Francsico. “But did they have to do it right before Christmas?”

Captain Andrew at the Wheel

The third quarter of FY2018 was like many before it. It was the 10th straight quarter of losses for Autodesk after their dramatic change of business model, from perpetual to term-licensing. But for some reason (was it the layoff?), it triggered the storm.

In the fierceness of a storm, it is hard to keep in mind that calmer waters, a better world, awaits on the other side.

I imagine Carl Bass, CEO of Autodesk until June of this year, hearing Andrew Anagnost’s calls to turn the ship this way or that, finally saying here “You take the wheel’ and stepping aside.

Upon taking the wheel as the new CEO, Andrew has sailed full into the storm. Resolute at the helm, he is clear in his direction. There may be some damage, but the path to take is clear. There is no time to waste, no sugar with the medicine. Users have to wake up and face the storm. Resellers, too. Employees who enjoyed jobs chasing dreams, who forgot their mission, those who grumble on the new direction… over the side they go.

Through the ship is being battered, it hasn’t sprung a leak. The user base is still the biggest paying CAD userbase in the world. Some of the users may be grumbling (they always do) but there is no indication of becoming a mass migration. Autodesk applications are still gold, the currency of the industries they serve, tried and true. User data is safe. The applications keep getting better and no other CAD company has been shown more ability to keep up with fast moving technology. Users understand that Autodesk will be there for them, supplying current needs and needs they have yet to realize. Try as they might, no company has been able to erode Autodesk’s market dominance in a significant way. The foreign firms that have long claimed they can do the same for less are plucking the few users who have jumped off the ship, mad they no longer had a cabin in perpetuity. Bigger CAD firms that have had to realize they can’t lure away Autodesk users, and can only, at best, grow their business alongside.

 

Comments

[Tom]

Hi David

Customers have invested in THEIR software packages and we will not hand them back to Autodesk just so we can rent them again but not have the right to use them if we choose to stop subscription based on limited advancements in development - we the people will not pay Autodesk for RANSOMWARE

You bean counters just dont get it
Mac'n'cheese

[Dave Stupka]

Not sure you realize this, but customers are driving the subscription model as much as the software vendors. Purchasing licenses with capital expense is painful from an accounting perspective. Being able to pay for subscriptions with operating expenses is a much appreciated option for most companies. Basic accounting is driving this change as much as anything else.

[Dave Ault]

Says someone who does not use the software for earning a living I suppose. I do and I am gone on 12-15-17. Two primary reasons. One is they want subscription only which is good for them if they survive long enough and very bad for customers who want cost containment and control. Those wise fiscal things Autodesk is pursuing that somehow should not apply to our businesses in turn.

Two is the TOS and EULA we all must sign to use future cloud based software from Autodesk and it absolves them from any damage due to hacking online or at porous server farms. These will sit as hard copy right next to the confidentiality agreements we have to sign with OUR customers where we have to guarantee their data security.

There is another moral aspect to this which is not lost on the customer base that made Autodesk what it is namely perpetual licenses.
Autodesk has stated to many of your stock analysts that subscription only is the future for them. So people who spent many tens of thousands of dollars over the years are to be jettisoned? Autodesk is raising prices to us rapidly and after three years gives no cost structure or promises. Many of us assume this is because the only way they can eventually end perpetual seats is to phase the software out for a more robust Fusion360. In a business where intellectual property has value and can have value for decades we do not plan year by year. Autodesk is proving itself to be a company that is not stable where users are concerned and not to be relied upon to keep their promises.