Autodesk (NASDAQ: ADSK) shares hit a 52-week high as the company reports huge success with its subscription program in the second quarter of fiscal year 2019. Among the company’s highlights  is subscription plan annualized recurring revenue of $1.68 billion, a 115 percent increase year-over-year. Total annualized recurring revenue was $2.35 billion, a 28 percent increase year-over-year. Deferred revenue was $1.80 billion representing a 1 percent increase year-over-year.

“Broad-based strength in customer demand and continued execution across our business helped accelerate growth in ARR and annualized revenue per subscription (ARPS),” said Andrew Anagnost, Autodesk president and CEO, in a statement.  “A superior user experience is motivating new customers to turn to Autodesk subscription and cloud offerings, and we continue to see a steady stream of existing maintenance customers migrating to subscription.”

Other highlights for the quarter include:

• Revenue was $612 million, a 22 percent increase year-over-year.
• Total recurring revenue in the second quarter was 96 percent of total revenue, compared to 91 percent in Q2 2018.
• Billings were $605 million, a 27 percent increase over Q2 2018.
• Total subscriptions increased 119,000 from the first quarter of fiscal year 2019 to 3.94 million at the end of the second quarter.
• Subscription plan subscriptions (product, enterprise business agreements and cloud) grew 290,000 in the first quarter to 2.86 million, driven by the conversion of 117,000 maintenance subscribers to the maintenance-to-subscription (M2S) program.
• Total GAAP spending was $636 million, a 4 percent increase.
• GAAP diluted net loss per share was $(0.18), compared to GAAP diluted net loss per share of $(0.66) in Q2 2018.

Autodesk CFO Scott Herren also commented on the company’s strong Q2:

“We posted strong results for several key metrics including billings, revenue, total deferred revenue, and earnings. We also generated positive cash flow from operating activities and expect to be cash flow positive for the year.  We’re pleased with our performance in the first half of the fiscal year and are confident in our ability to drive results for the remainder of the year,” said Herren.

The company provided the following guidance for the third quarter of 2019, ending October 31, 2018:

• Revenue between $635 million and $645 million
• GAAP diluted net loss per share between $(0.09) and $(0.05)
• Non-GAAP diluted net loss per share between $0.24 and $0.28

Autodesk provided the following guidance for the full year fiscal 2019:

• Billings between $2.58 billion and $2.64 billion
• Revenue between $2.49 billion and $2.51 billion
• EPS GAAP between $(0.59) and $(0.51)
• EPS Non-GAAP between $0.87 and $0.95
• Net subscription additions between 500,000 and 550,000
• Total AAR growth between 28 percent and 30 percent

Investors seem pleased with the results. On August 23, when financials were released, Autodesk stock was valued at $136.31 per share. At 7:15 p.m. EDT on August 24, Autodesk stock had increased $20.89 per share to $157.20, a 52-week high.

Bloomberg said the boost in stock price was a record and was due to the company hitting the trifecta, beating financial analyst estimates on annual recurring revenue, net subscription additions and average revenue per subscription.

“People are seeing the results they expect to see, and it’s actually giving us some room to talk about what we’re trying to do with the company long term,” said Anagnost in an interview on Bloomberg Television.

Insider Take:

These solid financials underscore the value of a company transitioning from a licensing-fee model to a subscription model with reliable, long-term recurring revenue. Autodesk is seeing solid growth, reporting record stock value for the last year. This is exciting to see because the transition for companies like Autodesk is a hard move to make in the short-term, but in the long-term, it is better for the company as well as the customer. Well done, Autodesk.