ADSK v ADBE – a tale of two graphs

I’m no financial analyst, so I’ll just leave these graphs here for your own interpretation. They show the profit/loss numbers for two software companies beginning with A that have abandoned perpetual license sales and gone all-subscription (rental).

Among other significant differences, one company went with very low rental prices while the other has extremely high rental prices. How have these differing strategies played out for Adobe and Autodesk? Green shows profit; red shows loss.

Adobe moved to the all-rental model earlier than Autodesk. The Autodesk graph therefore covers a shorter period than the Adobe one. Feel free to slide the Autodesk one along to the point you think best matches the equivalent point in the Adobe timeline.

The black lines are trend lines. The thick one is linear, the thin one is a 4-quarter moving average. The linear trend lines are not directly comparable because of the different timeframes covered (the Adobe one includes the revenue recovery stage which Autodesk has yet to enter).

Neither of these graphs reflect deferred revenue (money that is received but not counted immediately). Full details of Autodesk’s financials are available here. Make your own financial decisions based on your own interpretations and/or using the advice of parties better qualified than myself. For now at least, the stock market loves what Autodesk is doing, even if Autodesk customers don’t. I just found the comparison interesting.

10 Comments

  1. Steve, why is Autodesk doing so bad? This kind of stuff can be buried so the average person thinks they are just not selling as much software, but is that the case? Or are they investing their profit away somehow to look bad but actually gaining assets in some way that suck up money? You have history with this because a previous post got replied to by financial people and it changed the conclusion some. Just looking for a simplified opinion as that graph of adesk surprised me.

    1. According to Autodesk, it’s not doing bad at all. Every quarter is wonderful.

      Deferred revenue is building up and will make future quarters look better as it is released into these profit/loss numbers. But that was the case for Adobe too.

      You’re right about the history, which is why I’m not going to try answering your question!

  2. Griffin

    Don’t know if this helps but Autodesk has been acquiring a lot of companies since 2000. Most of those acquisitions were CAD software companies that weren’t service based. Adobe has been doing the same but their focus has been on web services, researchanalytics, marketingadvertising and mobile so they have a wider recurring revenue stream from those companies.

  3. David Matthews

    Yeah bit misleading. You’re showing GAAP numbers here which include accounting anomalies like the “tax write off” in Q216 for ADSK and the impact of their 2017 restructuring. But yes, all companies who transition from perpetual license to subscription will show a short term decline followed by growth. Look how ADBE’s numbers fell off the cliff in 2013, then rebounded.

  4. As I understand, Autodesk is not doing good in financial terms. This can be shown not only from the above graphs but from the 900+ layoff’s too (late 2016). But, I don’t think that it’s the company’s fault. A lot of new players are in the game now and the constructions all over the world have nose dived.

  5. I don’t trust the Adobe graph. Who really knows what numbers are fudged to make it look like subscription model is the cause of the increased profit. Didn’t Adobe lay off a ton of people, and move out of their huge Adobe building among a whole host of other changes. Costs down, profits up. There’s no way to say with any certainty that subscription was the key to their profit rise. Of course, they will say that… and Autodesk will say it too. What both companies should do if they had any respect for customers, is offer the choice of subscription or the traditional one-time payment option.

    1. Griffin

      @spazonymous
      There is no trick other than most people thinking that software is their only product. About half of their 2016 revenue came from their media and marketing services.

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