Autodesk, Inc. - Quarter Report: 2019 July (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-14338

AUTODESK, INC.

(Exact name of registrant as specified in its charter)



Delaware		94-2819853
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer Identification No.)

111 McInnis Parkway,
San Rafael,	California	94903
(Address of principal executive offices)		(Zip Code)

(415) 507-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ADSK	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 29, 2019, registrant had outstanding 219,587,608 shares of common stock.

AUTODESK, INC. FORM 10-Q

TABLE OF CONTENTS



		Page No.
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 31, 2019 and 2018	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended July 31, 2019 and 2018	5

	Condensed Consolidated Balance Sheets as of July 31, 2019 and January 31, 2019	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2019 and 2018	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	53

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68

Item 3.	Defaults Upon Senior Securities	68

Item 4.	Mine Safety Disclosures	69

Item 5.	Other Information	69

Item 6.	Exhibits	69

	Signatures	70

PART I. FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

AUTODESK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)



	Three Months Ended July 31,						Six Months Ended July 31,
	2019			2018			2019			2018
Net revenue:
Subscription	$	663.7		$	420.6		$	1,259.5		$	771.0
Maintenance	103.5			166.4			215.5			347.6
Total subscription and maintenance revenue	767.2			587.0			1,475.0			1,118.6
Other	29.6			24.7			57.3			53.0
Total net revenue	796.8			611.7			1,532.3			1,171.6
Cost of revenue:
Cost of subscription and maintenance revenue	53.0			54.1			112.7			104.5
Cost of other revenue	17.9			12.3			31.7			25.1
Amortization of developed technology	8.6			3.4			17.8			7.0
Total cost of revenue	79.5			69.8			162.2			136.6
Gross profit	717.3			541.9			1,370.1			1,035.0
Operating expenses:
Marketing and sales	316.8			289.1			630.1			565.5
Research and development	215.4			180.8			421.0			353.6
General and administrative	101.4			79.1			200.5			152.0
Amortization of purchased intangibles	9.7			3.8			19.5			7.6
Restructuring and other exit costs, net	0.2			13.8			0.4			36.3
Total operating expenses	643.5			566.6			1,271.5			1,115.0
Income (loss) from operations	73.8			(24.7		)	98.6			(80.0		)
Interest and other (expense) income, net	(7.3		)	1.3			(23.5		)	(7.2		)
Income (loss) before income taxes	66.5			(23.4		)	75.1			(87.2		)
Provision for income taxes	(26.3		)	(16.0		)	(59.1		)	(34.6		)
Net income (loss)	$	40.2		$	(39.4	)	$	16.0		$	(121.8	)
Basic net income (loss) per share	$	0.18		$	(0.18	)	$	0.07		$	(0.56	)
Diluted net income (loss) per share	$	0.18		$	(0.18	)	$	0.07		$	(0.56	)
Weighted average shares used in computing basic net income (loss) per share	219.6			219.0			219.6			218.8
Weighted average shares used in computing diluted net income (loss) per share	222.4			219.0			222.3			218.8

See accompanying Notes to Condensed Consolidated Financial Statements.

AUTODESK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)



	Three Months Ended July 31,						Six Months Ended July 31,
	2019			2018			2019			2018
Net income (loss)	$	40.2		$	(39.4	)	$	16.0		$	(121.8	)
Other comprehensive income (loss), net of reclassifications:
Net (loss) gain on derivative instruments (net of tax effect of ($1.7), ($1.1), ($2.0) and ($1.8), respectively)	(4.3		)	11.6			(1.0		)	17.6
Change in net unrealized (loss) gain on available-for-sale debt securities (net of tax effect of $0.1, ($0.1), ($0.3) and $0.0, respectively)	(0.2		)	(1.3		)	0.9			(0.7		)
Change in defined benefit pension items (net of tax effect of $0.4, ($0.1), $0.5 and ($1.5), respectively)	(1.8		)	2.3			(2.4		)	10.0
Net change in cumulative foreign currency translation loss (net of tax effect of ($0.4), $0.2, $0.0 and $0.5, respectively)	(22.8		)	(29.7		)	(33.2		)	(54.0		)
Total other comprehensive loss	(29.1		)	(17.1		)	(35.7		)	(27.1		)
Total comprehensive income (loss)	$	11.1		$	(56.5	)	$	(19.7	)	$	(148.9	)

See accompanying Notes to Condensed Consolidated Financial Statements.

AUTODESK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)



	July 31, 2019			January 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	923.9		$	886.0
Marketable securities	67.4			67.6
Accounts receivable, net	347.4			474.3
Prepaid expenses and other current assets	176.8			192.1
Total current assets	1,515.5			1,620.0
Computer equipment, software, furniture and leasehold improvements, net	151.4			149.7
Operating lease right-of-use assets	298.8			—
Developed technologies, net	87.6			105.6
Goodwill	2,431.8			2,450.8
Deferred income taxes, net	46.3			65.3
Other assets	341.3			337.8
Total assets	$	4,872.7		$	4,729.2
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	93.0		$	101.6
Accrued compensation	213.8			280.8
Accrued income taxes	5.9			13.2
Deferred revenue	1,772.1			1,763.3
Operating lease liabilities	58.9			—
Current portion of long-term notes payable, net	449.2			—
Other accrued liabilities	114.4			142.3
Total current liabilities	2,707.3			2,301.2
Long-term deferred revenue	477.4			328.1
Long-term operating lease liabilities	258.1			—
Long-term income taxes payable	19.5			21.5
Long-term deferred income taxes	98.9			79.8
Long-term notes payable, net	1,389.8			2,087.7
Other liabilities	116.0			121.8
Stockholders’ deficit:
Common stock and additional paid-in capital	2,200.7			2,071.5
Accumulated other comprehensive loss	(170.7		)	(135.0		)
Accumulated deficit	(2,224.3		)	(2,147.4		)
Total stockholders’ deficit	(194.3		)	(210.9		)
Total liabilities and stockholders' deficit	$	4,872.7		$	4,729.2

See accompanying Notes to Condensed Consolidated Financial Statements.

AUTODESK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



	Six Months Ended July 31,
	2019			2018
Operating activities:
Net income (loss)	$	16.0		$	(121.8	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion	64.8			46.3
Stock-based compensation expense	163.4			111.3
Deferred income taxes	35.8			(0.3		)
Restructuring and other exit costs, net	0.4			36.6
Other operating activities	(4.2		)	(1.3		)
Changes in operating assets and liabilities
Accounts receivable	125.8			204.2
Prepaid expenses and other current assets	27.4			7.9
Accounts payable and accrued liabilities	(138.1		)	(201.3		)
Deferred revenue	158.3			(66.7		)
Accrued income taxes	(9.1		)	11.5
Net cash provided by operating activities	440.5			26.4
Investing activities:
Purchases of marketable securities	(19.9		)	(110.1		)
Sales of marketable securities	22.4			27.0
Maturities of marketable securities	5.0			119.6
Capital expenditures	(29.5		)	(36.7		)
Acquisitions, net of cash acquired	—			(34.1		)
Other investing activities	(10.5		)	(6.0		)
Net cash used in investing activities	(32.5		)	(40.3		)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs	49.7			50.4
Taxes paid related to net share settlement of equity awards	(31.2		)	(53.0		)
Repurchases of common stock	(134.6		)	(154.7		)
Repayment of debt	(250.0		)	—
Net cash used in financing activities	(366.1		)	(157.3		)
Effect of exchange rate changes on cash and cash equivalents	(4.0		)	(11.4		)
Net increase (decrease) in cash and cash equivalents	37.9			(182.6		)
Cash and cash equivalents at beginning of period	886.0			1,078.0
Cash and cash equivalents at end of period	$	923.9		$	895.4

Supplemental cash flow disclosure:
Non-cash investing activities:
Fair value of common stock issued as consideration for business combination	$	—		$	44.8

See accompanying Notes to Condensed Consolidated Financial Statements.

AUTODESK, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Tables in millions, except share and per share data, or as otherwise noted)

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of Autodesk, Inc. (“Autodesk,” “we,” “us,” “our,” or the “Company”) as of July 31, 2019, and for the three and six months ended July 31, 2019 and 2018, have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information along with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In management’s opinion, Autodesk made all adjustments (consisting of normal, recurring and non-recurring adjustments) during the quarter that were considered necessary for the fair statement of the financial position and operating results of the Company. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. In addition, the results of operations for the three and six months ended July 31, 2019, are not necessarily indicative of the results for the entire fiscal year ending January 31, 2020, or for any other period. Further, the balance sheet as of January 31, 2019, has been derived from the audited Consolidated Balance Sheet as of this date. There have been no material changes, other than what is discussed herein, to Autodesk's significant accounting policies as compared to the significant accounting policies disclosed in the Annual Report on Form 10-K for the fiscal year ended January 31, 2019. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes, together with management’s discussion and analysis of financial position and results of operations, contained in Autodesk’s Annual Report on Form 10-K for the fiscal year ended January 31, 2019, filed on March 25, 2019.

2. Recently Issued Accounting Standards

With the exception of those discussed below, there have been no recent changes in accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) or adopted by the Company during the six months ended July 31, 2019, that are applicable to the Company.

Accounting standards adopted

Autodesk adopted ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" on February 1, 2019. The amendment helps simplify certain aspects of hedge accounting and results in a more accurate portrayal of the economics of an entity’s risk management activities in its financial statements. For cash flow and net investment hedges as of the adoption date, the guidance required a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. The transition impact was immaterial and no substantive changes were made to Autodesk’s current processes, accounting, or disclosures for cash flow hedges.

Autodesk adopted ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” on February 1, 2019. The amendment allows entities the option to reclassify tax effects stranded in accumulated other comprehensive income as a result of the U.S. Tax Cuts and Jobs Act (the "Tax Act") to retained earnings. Upon adoption, the amount reclassified from other comprehensive loss to stockholders' deficit was not material.

Leases

In February 2016, FASB issued ASU No. 2016-02, Leases (ASC Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The new standard requires entities to reflect the net present value of all future fixed lease payments for both operating and finance leases on the balance sheet. It also requires entities to disclose fixed and variable lease payments separately and by lease type (operating vs. finance leases). In addition, FASB issued ASU No. 2018-10 and 2018-11 in July 2018 and ASU No. 2018-20 in December 2018 to help provide accommodations and interpretive clarifications on various issues raised by stakeholders. ASU No. 2018-10 clarifies ambiguous or potentially conflicting guidance in ASU No. 2016-02. ASU No. 2018-11 provides an additional transition option to apply ASU No. 2016-02 upon adoption of the new standard.

Adoption and policy elections

Autodesk adopted ASU No. 2016-02 as of February 1, 2019, using the modified retrospective method permitted under ASU No. 2018-11 for all existing leases which does not include retrospectively adjusting prior periods presented in the financial statements. Under ASU No. 2016-02, as the lessee, Autodesk recognized a right-of-use ("ROU") asset and offsetting lease liability for leases that existed on adoption. The asset and liability were measured at present value of all future fixed lease payments, discounted using the Company’s incremental borrowing rate. Autodesk has elected to opt for the practical expedients: to not reassess whether any existing contracts are leases or contain a lease; to not reassess the lease classification of existing leases; and to not reassess initial direct costs for existing leases. Autodesk has elected to combine lease and non-lease components for new leases post adoption for all lease assets.

Autodesk determines if an arrangement is a lease at inception. Operating leases are included in “Operating lease right-of-use assets”, “Operating lease liabilities”, and “Long-term operating lease liabilities” in the Condensed Consolidated Balance Sheets.

Operating lease ROU assets represent Autodesk’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, Autodesk uses its incremental borrowing rate, adjusted for local country-specific borrowing rates as applicable, based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU assets include any adjustments for prepayments and any lease incentives. Options to extend or terminate the lease are considered in determining the lease term when it is reasonably certain that the option will be exercised. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Autodesk has lease agreements with lease and non-lease components. Autodesk accounts for the lease and non-lease components as a single lease component.

Quantitative effect of ASC Topic 842 adoption

Under the modified retrospective method, Autodesk recorded $(0.7) million to the opening balance of "Accumulated deficit" as of February 1, 2019. The comparative information has not been adjusted and continues to be reported as under previous accounting guidance. The adoption of ASU No. 2016-02 did not have a material impact to the Company’s condensed consolidated statement of operations or net cash provided by operating activities as of February 1, 2019.

The following table shows line items that were materially impacted by the adoption of ASC Topic 842 on February 1, 2019, on Autodesk’s Condensed Consolidated Balance Sheet:



	As reported January 31, 2019			Impact from the adoption (1)			As adjusted
ASSETS
Prepaid expenses and other current assets	$	192.1		$	(5.9	)	$	186.2
Total current assets	1,620.0			(5.9		)	1,614.1
Operating lease right-of-use assets	—			283.4			283.4
Total assets	4,729.2			277.5			5,006.7
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Other accrued liabilities	142.3			(4.9		)	137.4
Operating lease liabilities	—			54.1			54.1
Long-term operating lease liabilities	—			245.9			245.9
Other liabilities	121.8			(16.9		)	104.9
Accumulated deficit	$	(2,147.4	)	$	(0.7	)	$	(2,148.1	)

____________________


(1)	Adoption of ASC Topic 842 did not have any other material impacts on Autodesk's condensed consolidated financial statements.

See Note 13, "Leases" for disclosures under ASC Topic 842.

Recently issued accounting standards not yet adopted

In June 2016, FASB issued ASU No. 2016-13 regarding ASC Topic 326, "Financial Instruments - Credit Losses," which modifies the measurement of expected credit losses of certain financial instruments. Autodesk plans to adopt ASU 2016-13 as of the effective date which represents Autodesk’s fiscal year beginning February 1, 2020. Autodesk does not believe the ASU will have a material impact on its consolidated financial statements.

3. Revenue Recognition

Revenue Recognition

Autodesk’s revenue is divided into three categories: subscription revenue, maintenance revenue, and other revenue. Revenue is recognized when control for these offerings is transferred to our customers and in an amount that reflects the consideration we expect to be entitled to in exchange for products and services.

Our contracts with customers may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. Judgment is required to determine the level of integration and interdependency between individual components of software and cloud functionality. This determination influences whether the software is considered distinct and accounted for separately as a license performance obligation, or not distinct and accounted for together with the cloud functionality as a single subscription performance obligation recognized over time.

For product subscriptions and enterprise business agreement ("EBA") subscriptions in which the desktop software and related cloud functionality are highly interrelated, the combined performance obligation is recognized ratably over the contract term as the obligation is delivered. For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer. For standalone maintenance subscriptions, cloud subscriptions, and technical support services, the performance obligation is satisfied ratably over the contract term as those services are delivered. For consulting services, the performance obligation is satisfied over a period of time as those services are delivered.

When an arrangement includes multiple performance obligations, which are concurrently delivered and have the same pattern of transfer to the customer (the services transfer to the customer over the contract period), we account for those performance obligations as a single performance obligation.

For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative standalone selling price ("SSP") of each obligation. Judgment is required to determine the SSP for each distinct performance obligation. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount that should be allocated based on the relative SSP of the various products and services.

In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that includes market conditions and other observable inputs. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customer and circumstance. In these instances, we use relevant information such as the sales channel and geographic region to determine the SSP.

Our indirect channel model includes both a two-tiered distribution structure, where Autodesk sells to distributors that subsequently sell to resellers, and a one-tiered structure where Autodesk sells directly to resellers. For these arrangements, transfer of control begins at the time access to our subscriptions is made available electronically to our customer, provided all other criteria for revenue recognition are met. Judgment is required to determine whether our distributors and resellers have the ability to honor their commitment to pay, regardless of whether they collect payment from their customers. If we were to change this assessment, it could cause a material increase or decrease in the amount of revenue that we report in a particular period.

As part of the indirect channel model, we have a partner incentive program that uses quarterly attainment of monetary rewards to motivate distributors and resellers to achieve mutually agreed upon business goals in a specified time period. Incentives related to our subscription program are recorded as a reduction to deferred revenue in the period the subscription transaction is billed, and are subsequently recognized as a reduction to subscription revenue over the contract period. A small portion of partner incentives reduce maintenance revenue in the current period. These incentive balances do not require significant assumptions or judgments. Depending on how the payments are made, the reserves associated with the partner incentive program are recorded on the balance sheet as either contra accounts receivable or accounts payable.

Revenue Disaggregation

Autodesk recognizes revenue from the sale of (1) product subscriptions, cloud service offerings, and EBAs, (2) renewal fees for existing maintenance plan agreements that were initially purchased with a perpetual software license, and (3) consulting, training and other goods and services. The three categories are presented as line items on Autodesk's unaudited Condensed Consolidated Statements of Operations.

Information regarding the components of Autodesk's net revenue from contracts with customers by geographic location, product family, and sales channel is as follows:



	Three Months Ended July 31,				Six Months Ended July 31,
	2019		2018		2019		2018
Net revenue by product family:
Architecture, Engineering and Construction	$	334.2	$	243.1	$	638.5	$	464.9
AutoCAD and AutoCAD LT	231.3		176.6		444.5		332.2
Manufacturing	174.6		146.1		342.1		281.5
Media and Entertainment	50.8		41.7		96.3		83.5
Other	5.9		4.2		10.9		9.5
Total net revenue	$	796.8	$	611.7	$	1,532.3	$	1,171.6

Net revenue by geographic area:
Americas
U.S.	$	267.9	$	205.2	$	517.0	$	401.1
Other Americas	58.0		42.3		104.7		79.9
Total Americas	325.9		247.5		621.7		481.0
Europe, Middle East and Africa	316.2		248.3		613.4		469.2
Asia Pacific	154.7		115.9		297.2		221.4
Total net revenue	$	796.8	$	611.7	$	1,532.3	$	1,171.6

Net revenue by sales channel:
Indirect	$	560.2	$	440.2	$	1,076.6	$	838.5
Direct	236.6		171.5		455.7		333.1
Total net revenue	$	796.8	$	611.7	$	1,532.3	$	1,171.6

Payments for product subscriptions, industry collections, cloud subscriptions, and maintenance subscriptions are typically due up front with payment terms of 30 to 45 days. Payments on EBAs are typically due in annual installments over the contract term, with payment terms of 30 to 60 days. Autodesk does not have any material variable consideration, such as obligations for returns, refunds, warranties or amounts due to customers for which significant estimation or judgment is required as of the reporting date.

Remaining performance obligations consist of total billed and unbilled deferred revenue. As of July 31, 2019, Autodesk had remaining performance obligations of $2.81 billion, which represents the total contract price allocated to remaining performance obligations, which are generally recognized over the next three years. We expect to recognize $2.01 billion or 72% of our remaining performance obligations as revenue during the next 12 months. We expect to recognize the remaining $798.9 million or 28% of our remaining performance obligations as revenue thereafter.

We expect that the amount of remaining performance obligations will change from quarter to quarter for several reasons, including the specific timing, duration and size of customer subscription and support agreements, varying billing cycles of such agreements, the specific timing of customer renewals, and foreign currency fluctuations.

Contract Balances

We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to performance completed in advance of scheduled billings. Contract assets were not material as of July 31, 2019. Deferred revenue relates to billings in advance of performance under the contract. The primary changes in our contract assets and deferred revenues are due to our performance under the contracts and billings.

Revenue recognized during the six months ended July 31, 2019, that was included in the deferred revenue balances at January 31, 2019, was $1.19 billion. The satisfaction of performance obligations typically lags behind payments received under revenue contracts from customers, which may lead to an increase in our deferred revenue balance over time.

4. Concentration of Credit Risk

Autodesk places its cash, cash equivalents and marketable securities in highly liquid instruments with, and in the custody of, multiple diversified financial institutions globally with high credit ratings and limits the amounts invested with any one institution, type of security and issuer. Autodesk’s primary commercial banking relationship is with Citigroup Inc. and its global affiliates. Citibank, N.A., an affiliate of Citigroup, is one of the lead lenders and an agent in the syndicate of Autodesk’s $650.0 million line of credit facility as well as our Term Loan Agreement. See Note 12, "Borrowing Arrangements," in the Notes to Condensed Consolidated Financial Statements for further discussion.

Total sales to the Company's largest distributor Tech Data Corporation and its global affiliates (“Tech Data”) accounted for 35% of Autodesk’s total net revenue for both the three and six months ended July 31, 2019 and 2018. The majority of the net revenue from sales to Tech Data is for sales made outside of the United States. In addition, Tech Data accounted for 28% and 29% of trade accounts receivable at July 31, 2019, and January 31, 2019, respectively. During the three and six months ended July 31, 2019 and 2018, Ingram Micro Inc. ("Ingram Micro") accounted for 10% and 11% of Autodesk's total net revenue, respectively. No other customer accounted for more than 10% of Autodesk's total net revenue or trade accounts receivable for each of the respective periods.

5. Financial Instruments

The following tables summarize the Company's financial instruments' amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category as of July 31, 2019, and January 31, 2019:



			July 31, 2019
			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value			Level 1		Level 2			Level 3
Cash equivalents (1):
	Commercial paper		$	32.0	$	—	$	—		$	32.0		$	—	$	32.0		$	—
	Agency discount notes		10.0		—		—			10.0			—		10.0			—
	Money market funds		365.0		—		—			365.0			365.0		—			—
	Other (2)		1.9		—		—			1.9			0.9		1.0			—
Marketable securities:
	Short-term trading securities
		Mutual funds	59.8		7.6		—			67.4			67.4		—			—
Derivative contract assets (3)			2.2		11.3		(1.9		)	11.6			—		11.0			0.6
Derivative contract liabilities (4)			—		—		(5.9		)	(5.9		)	—		(5.9		)	—
		Total	$	470.9	$	18.9	$	(7.8	)	$	482.0		$	433.3	$	48.1		$	0.6

____________________


(1)	Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets.


(2)	Consists of custody cash deposits and certificates of deposit.


(3)	Included in “Prepaid expenses and other current assets” or “Other assets” in the accompanying Condensed Consolidated Balance Sheets.


(4)	Included in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.



			January 31, 2019
			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value			Level 1		Level 2			Level 3
Cash equivalents (1):
	Certificates of deposit		$	1.0	$	—	$	—		$	1.0		$	—	$	1.0		$	—
	Commercial paper		87.9		—		—			87.9			—		87.9			—
	Corporate debt securities		5.0		—		—			5.0			—		5.0			—
	Custody cash deposit		0.8		—		—			0.8			0.8		—			—
	Money market funds		281.4		—		—			281.4			281.4		—			—
Marketable securities:
	Short-term
		Other (2)	6.2		1.1		—			7.3			2.7		4.6			—
	Short-term trading securities
		Mutual funds	56.6		3.7		—			60.3			60.3		—			—
	Long-term
Convertible debt securities (3)			4.6		1.9		(2.1		)	4.4			—		—			4.4
Derivative contract assets (4)			1.7		8.6		(1.8		)	8.5			—		7.7			0.8
Derivative contract liabilities (5)			—		—		(7.4		)	(7.4		)	—		(7.4		)	—
		Total	$	445.2	$	15.3	$	(11.3	)	$	449.2		$	345.2	$	98.8		$	5.2

____________________


(1)	Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets.


(2)	Consists of corporate bonds, commercial paper, and common stock.


(3)	Considered "available for sale" and included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.


(4)	Included in “Prepaid expenses and other current assets,” “Other assets,” or “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.


(5)	Included in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.

Autodesk classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Generally, marketable securities with remaining maturities of up to 12 months are classified as short-term and marketable securities with remaining maturities greater than 12 months are classified as long-term. Autodesk may sell certain of its marketable securities prior to their stated maturities for strategic purposes or in anticipation of credit deterioration.

Autodesk applies fair value accounting for certain financial assets and liabilities, which consist of cash equivalents, marketable securities and other financial instruments, on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has elected to use the income approach to value derivatives using the observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted). Mid-market pricing is used as a practical expedient and when required, rates are interpolated from commonly quoted intervals published by market sources.

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and (Level 3) unobservable inputs for which there is little or no market data, which require Autodesk to develop its own assumptions. When determining fair value, Autodesk uses observable market data and relies on unobservable inputs only when observable market data is not available. Key inputs for currency derivatives are spot rates, forward rates, interest rates, volatility, and credit default rates. The spot rate for each currency is the same spot rate used for all balance sheet translations at the measurement date. Autodesk reviews for any potential changes on a quarterly basis, in conjunction with our fiscal quarter-end close. It is Autodesk's assessment that the leveling best reflects current market activity when observing the pricing information for these assets.

Autodesk's cash equivalents, marketable securities and financial instruments are primarily classified within Level 1 or Level 2 of the fair value hierarchy. Autodesk values its securities on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1) or inputs other than quoted prices that are observable either directly or indirectly in determining fair value (Level 2). Autodesk's Level 2 securities and derivatives are valued primarily using observable inputs other than quoted prices in active markets for identical assets and liabilities. Autodesk's Level 3 securities consist of derivative contracts.

A reconciliation of the change in Autodesk’s Level 3 items for the six months ended July 31, 2019, was as follows:



	Fair Value Measurements Using Significant Unobservable Inputs
	(Level 3)
		Derivative Contracts			Convertible Debt Securities			Total
Balances, January 31, 2019		$	0.8		$	4.4		$	5.2
Impairments		—			(1.0		)	(1.0		)
Settlements		—			(3.5		)	(3.5		)
(Loss) gain included in earnings (1)		(0.2		)	0.2			—
Loss included in OCI		—			(0.1		)	(0.1		)
Balances, July 31, 2019		$	0.6		$	—		$	0.6

____________________

(1) Included in "Interest and other (expense) income, net" in the accompanying Condensed Consolidated Statements of Operations.

As of July 31, 2019, and January 31, 2019, Autodesk had no material unrealized losses, individually and in the aggregate, for securities that are in a continuous unrealized loss position for greater than twelve months.

There was no gain or loss for the sales or redemptions of securities during the six months ended July 31, 2019, and July 31, 2018. Gains and losses resulting from the sale or redemption of securities are recorded in “Interest and other (expense) income, net” on the Company's Condensed Consolidated Statements of Operations.

Proceeds from the sale and maturity of marketable securities for the three and six months ended July 31, 2019 was $22.8 million and $27.4 million, respectively, and $71.8 million and $146.6 million for the three and six months ended July 31, 2018, respectively.

Non-marketable equity securities

As of July 31, 2019, and January 31, 2019, Autodesk had $121.9 million and $111.6 million in direct investments in privately held companies. These non-marketable equity security investments do not have readily determined fair values and Autodesk uses the measurement alternative to account for the adjustment to these investments in a given quarter.

Under the measurement alternative method, these investments are measured at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer in the current period. To determine if a transaction is deemed a similar investment, Autodesk considers the rights and obligations between the investments and the extent to which those differences would affect the fair values of those investments with additional consideration for the stage of development of the investee company. The fair value would then be adjusted positively or negatively based on available information such as pricing in recent rounds of financing. During the six months ended July 31, 2019 and July 31, 2018, Autodesk recorded $1.7 million and $6.2 million, respectively, as an upward adjustment on certain of its privately held investments, reflected as a gain in "Interest and other (expense) income, net" on the Company's Condensed Consolidated Statement of Operations. As of July 31, 2019, Autodesk has recorded $7.9 million in cumulative upward adjustments on its privately held investments.

Non-marketable equity securities investments are periodically assessed for impairment based on available information such as current cash positions, earnings and cash flow positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. Autodesk does not intend to sell these investments and it is not more likely than not that Autodesk will be required to sell the investment before recovery of the cost basis. If Autodesk determines that an impairment has occurred, Autodesk writes down the investment to its fair value. During the six months ended July 31, 2019 and July 31, 2018 Autodesk recorded $3.4 million and $4.8 million, respectively, in impairments and negative

adjustments on its privately held investments, reflected as a loss in "Interest and other (expense) income, net" on the Company's Condensed Consolidated Statements of Operations. As of July 31, 2019, Autodesk has recorded $8.2 million in cumulative impairments and negative adjustments on its privately held investments. Autodesk does not consider the remaining investments to be impaired at July 31, 2019.

Derivative Financial Instruments

Under its risk management strategy, Autodesk uses derivative instruments to manage its short-term exposures to fluctuations in foreign currency exchange rates that exist as part of ongoing business operations. Autodesk's general practice is to hedge a portion of transaction exposures primarily denominated in euros, Japanese yen, Swiss francs, British pounds, Canadian dollars, Australian dollars, Singapore dollars, Swedish krona and Czech koruna. These instruments generally have maturities between one and twelve months in the future. Autodesk does not enter into derivative instrument transactions for trading or speculative purposes.

The bank counterparties to the derivative contracts potentially expose Autodesk to credit-related losses in the event of their nonperformance. However, to mitigate that risk, Autodesk only contracts with counterparties who meet the Company's minimum requirements under its counterparty risk assessment process. Autodesk monitors counterparty risk on at least a quarterly basis and will adjust its exposure to various counterparties as necessary. Autodesk generally enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. Autodesk does not have any master netting arrangements in place with collateral features.

Foreign currency contracts designated as cash flow hedges

Autodesk uses foreign currency contracts to reduce the exchange rate impact on a portion of the net revenue or operating expense of certain anticipated transactions. These currency collars and forward contracts are designated and documented as cash flow hedges. The effectiveness of the cash flow hedge contracts is assessed quantitatively using regression at inception and qualitatively thereafter considering transaction timing and probability and counterparty credit quality. To receive cash flow hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge relationship and the hedges are expected to be highly effective in offsetting changes to future cash flows on hedged transactions. The gains and losses on these hedges are included in “Accumulated other comprehensive loss” and are reclassified into earnings at the time the forecasted revenue or expense is recognized. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, Autodesk reclassifies and discloses the gain or loss on the related cash flow hedge from “Accumulated other comprehensive loss” to “Interest and other (expense) income, net” in the Company's Condensed Consolidated Financial Statements at that time.

The notional amounts of these contracts are presented net settled and were $1.06 billion at July 31, 2019, and $803.5 million at January 31, 2019. Outstanding contracts are recognized as either assets or liabilities on the balance sheet at fair value. The majority of the net gain of $14.0 million remaining in “Accumulated other comprehensive loss” as of July 31, 2019, is expected to be recognized into earnings within the next twenty-four months.

The location and amount of gain or (loss) recognized in income on cash flow hedges together with the total amount of income or expense presented in the Company's Condensed Consolidated Statements of Operations where the effects of the hedge are recorded were as follows for the three and six months ended July 31, 2019.



	Three Months Ended July 31, 2019
	Net revenue				Cost of revenue			Operating expenses
	Subscription revenue		Maintenance revenue		Cost of subscription and maintenance revenue			Marketing and sales			Research and development			General and administrative
Total amounts of income and expense line items presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded	$	663.7	$	103.5	$	53.0		$	316.8		$	215.4		$	101.4

Gain (loss) on cash flow hedging relationships in Subtopic ASC 815-20
Foreign exchange contracts
Amount of gain (loss) reclassified from accumulated other comprehensive income into income	$	3.2	$	1.8	$	(0.2	)	$	(0.8	)	$	(0.2	)	$	(0.4	)

	Six Months Ended July 31, 2019
	Net revenue				Cost of revenue			Operating expenses
	Subscription revenue		maintenance Revenue		Cost of subscription and maintenance revenue			Marketing and sales			Research and development			General and administrative
Total amounts of income and expense line items presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded	$	1,259.5	$	215.5	$	112.7		$	630.1		$	421.0		$	200.5

Gain (loss) on cash flow hedging relationships in Subtopic ASC 815-20
Foreign exchange contracts
Amount of gain (loss) reclassified from accumulated other comprehensive income into income	$	5.4	$	3.1	$	(0.3	)	$	(2.4	)	$	(0.5	)	$	(1.2	)

Derivatives not designated as hedging instruments

Autodesk uses foreign currency contracts that are not designated as hedging instruments to reduce the exchange rate risk associated primarily with foreign currency denominated receivables, payables, and cash. These forward contracts are marked-to-market at the end of each fiscal quarter with gains and losses recognized in “Interest and other (expense) income, net.” These derivative instruments do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivative instruments are intended to offset the gains or losses resulting from the revaluation and settlement of the underlying foreign currency denominated receivables, payables, and cash. The notional amounts of these foreign currency contracts are presented net settled and were $298.8 million at July 31, 2019, and $579.8 million at January 31, 2019.

In addition to these foreign currency contracts, Autodesk holds derivative instruments issued by privately held companies, which are not designated as hedging instruments. These derivatives consist of certain conversion options on the convertible debt securities held by Autodesk and an option to acquire a privately held company. These derivatives are recorded at fair value

as of each balance sheet date and are recorded in “Other assets.” Changes in the fair values of these instruments are recognized in “Interest and other (expense) income, net.”

Fair Value of Derivative Instruments

The fair values of derivative instruments in Autodesk’s Condensed Consolidated Balance Sheets were as follows as of July 31, 2019 and January 31, 2019:



	Balance Sheet Location	Fair Value at
	Balance Sheet Location	July 31, 2019		January 31, 2019
Derivative Assets
Foreign currency contracts designated as cash flow hedges	Prepaid expenses and other current assets	$	6.1	$	4.3
Derivatives not designated as hedging instruments	Prepaid expenses and other current assets and Other assets	5.5		4.2
Total derivative assets		$	11.6	$	8.5
Derivative Liabilities
Foreign currency contracts designated as cash flow hedges	Other accrued liabilities	$	2.6	$	3.3
Derivatives not designated as hedging instruments	Other accrued liabilities	3.3		4.1
Total derivative liabilities		$	5.9	$	7.4

The effects of derivatives designated as hedging instruments on Autodesk’s Condensed Consolidated Statements of Operations were as follows for the three and six months ended July 31, 2019 and 2018 (amounts presented include any income tax effects):



	Foreign Currency Contracts
	Three Months Ended July 31,						Six Months Ended July 31,
	2019			2018			2019			2018
Amount of gain recognized in accumulated other comprehensive loss on derivatives (effective portion)	$	(0.9	)	$	6.4		$	3.1		$	13.3
Amount and location of gain (loss) reclassified from accumulated other comprehensive loss into income (loss) (effective portion)
Net revenue	$	5.0		$	(3.5	)	$	8.5		$	(6.0	)
Cost of revenue	(0.2		)	—			(0.3		)	—
Operating expenses	(1.4		)	(1.6		)	(4.1		)	1.7
Total	$	3.4		$	(5.1	)	$	4.1		$	(4.3	)
Amount and location of (loss) gain recognized in (loss) income on derivatives (ineffective portion and amount excluded from effectiveness testing)
Interest and other (expense) income, net	$	(2.5	)	$	0.7		$	1.3		$	0.5

The effects of derivatives not designated as hedging instruments on Autodesk’s Condensed Consolidated Statements of Operations were as follows for the three and six months ended July 31, 2019 and 2018 (amounts presented include any income tax effects):



	Three Months Ended July 31,					Six Months Ended July 31,
	2019			2018		2019		2018
Amount and location of gain recognized on derivatives in net (loss) income
Interest and other (expense) income, net	$	(2.4	)	$	1.4	$	1.7	$	6.0

6. Stock-based Compensation Expense

Stock Options:

A summary of stock option activity for the six months ended July 31, 2019 is as follows:



	Number of shares (in millions)		Weighted average exercise price per share		Weighted average remaining contractual term (in years)	Aggregate intrinsic value (1) (in millions)
Options outstanding at January 31, 2019	0.8		$	23.95
Exercised	(0.2	)	22.76
Options outstanding at July 31, 2019	0.6		$	24.46	6.8	$	78.6
Options vested and exercisable at July 31, 2019	0.2		$	32.71	4.0	$	21.8
Shares available for grant at July 31, 2019	17.4

_______________


(1)	Represents the total pre-tax intrinsic value, based on Autodesk’s closing stock price of $156.17 per share as of July 31, 2019.

As of July 31, 2019, compensation cost of $42.3 million related to non-vested stock options is expected to be recognized over a weighted average period of 2.3 years.

The following table summarizes information about the pre-tax intrinsic value of options exercised during the six months ended July 31, 2019 and 2018:



(in millions)	Six Months Ended July 31,
	2019		2018
Pre-tax intrinsic value of options exercised (1)	$	26.9	$	6.5

——————


(1)	The intrinsic value of options exercised is calculated as the difference between the exercise price of the option and the market value of the stock on the date of exercise.

Restricted Stock Units:

A summary of restricted stock activity for the six months ended July 31, 2019, is as follows:



	Unvested restricted stock units		Weighted average grant date fair value per share
	(in thousands)
Unvested restricted stock units at January 31, 2019	4,287.4		$	120.07
Granted	1,349.0		159.87
Vested	(542.1	)	113.27
Canceled/Forfeited	(205.5	)	125.53
Performance Adjustment (1)	23.8		156.69
Unvested restricted stock units at July 31, 2019	4,912.6		$	131.82

_______________


(1)	Based on Autodesk's financial results and relative total stockholder return for the fiscal 2019 performance period. The performance stock units were attained at rates ranging from 105.2% to 122.5% of the target award.

The fair value of the shares vested during the six months ended July 31, 2019 and 2018, was $84.3 million and $133.7 million, respectively.

During the six months ended July 31, 2019, Autodesk granted 0.8 million restricted stock units. Autodesk recorded stock-based compensation expense related to restricted stock units of $58.9 million and $44.1 million during the three months ended July 31, 2019 and 2018, respectively. Autodesk recorded stock-based compensation expense related to restricted stock units of $113.3 million and $85.8 million during the six months ended July 31, 2019 and 2018, respectively.

During the six months ended July 31, 2019, Autodesk granted 0.3 million performance stock units for which the ultimate number of shares earned is determined based on the achievement of performance criteria at the end of the stated service and performance period. The performance criteria for the performance stock units are based on Annualized Recurring Revenue ("ARR") and free cash flow goals adopted by the Compensation and Human Resource Committee, as well as total stockholder return compared against companies in the S&P North American Technology Software Index with a market capitalization over $2.0 billion (“Relative TSR”). These performance stock units vest over a three-year period and have the following vesting schedule:


•	Up to one third of the performance stock units may vest following year one, depending upon the achievement of the performance criteria for fiscal 2020 as well as 1-year Relative TSR (covering year one).


•	Up to one third of the performance stock units may vest following year two, depending upon the achievement of the performance criteria for year two as well as 2-year Relative TSR (covering years one and two).


•	Up to one third of the performance stock units may vest following year three, depending upon the achievement of the performance criteria for year three as well as 3-year Relative TSR (covering years one, two and three).

Autodesk also granted 0.3 million performance stock units for which the ultimate number of shares earned is based on the Autodesk closing stock price on each vesting date. As these awards will be settled in a fixed dollar amount of shares, the awards are accounted for as a liability-classified award.

Performance stock units are not considered outstanding stock at the time of grant, as the holders of these units are not entitled to any of the rights of a stockholder, including voting rights. Autodesk has determined the grant date fair value for these awards using the stock price on the date of grant or if the awards are also subject to a market condition, a Monte Carlo simulation model. The fair value of the performance stock units is expensed using the accelerated attribution over the vesting period.

Autodesk recorded stock-based compensation expense related to performance stock units of $11.0 million and $5.9 million for the three months ended July 31, 2019 and 2018, respectively. Autodesk recorded stock-based compensation expense related to performance stock units of $17.5 million and $12.4 million for the six months ended July 31, 2019 and 2018, respectively.

1998 Employee Qualified Stock Purchase Plan (“ESPP”)

Under Autodesk’s ESPP, which was approved by stockholders in 1998, eligible employees may purchase shares of Autodesk’s common stock at their discretion using up to 15% of their eligible compensation, subject to certain limitations, at 85% of the lower of Autodesk's closing price (fair market value) on the offering date or the exercise date. The offering period for ESPP awards consists of four, six-month exercise periods within a 24-month offering period.

A summary of the ESPP activity for the six months ended July 31, 2019 and 2018, is as follows:



	Six Months Ended July 31,
	2019		2018
Issued shares (in millions)	0.5		0.5
Average price of issued shares	$	99.46	$	88.45
Weighted average grant date fair value of awards granted under the ESPP (1)	$	52.41	$	37.64

_______________


(1)	Calculated as of the award grant date using the Black-Scholes Merton (“BSM") option pricing model.

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense for the three and six months ended July 31, 2019 and 2018, respectively, as follows:



	Three Months Ended July 31,						Six Months Ended July 31,
	2019			2018			2019			2018
Cost of subscription and maintenance revenue	$	3.4		$	3.1		$	7.0		$	5.8
Cost of other revenue	1.4			0.9			2.7			1.7
Marketing and sales	36.0			25.9			68.5			49.9
Research and development	30.8			18.7			57.5			36.5
General and administrative	16.6			8.3			27.7			17.4
Stock-based compensation expense related to stock awards and ESPP purchases	88.2			56.9			163.4			111.3
Tax benefit	(0.1		)	(0.2		)	(0.3		)	(0.6		)
Stock-based compensation expense related to stock awards and ESPP purchases, net of tax	$	88.1		$	56.7		$	163.1		$	110.7

Stock-based Compensation Expense Assumptions

Autodesk determines the grant date fair value of its share-based payment awards using a BSM option pricing model or the quoted stock price on the date of grant, unless the awards are subject to market conditions, in which case Autodesk uses a binomial-lattice model (e.g., Monte Carlo simulation model). The Monte Carlo simulation model uses multiple input variables to estimate the probability that market conditions will be achieved. Autodesk uses the following assumptions to estimate the fair value of stock-based awards:



	Six Months Ended July 31, 2019		Six Months Ended July 31, 2018
	Performance Stock Units (1)	ESPP (1)	Performance Stock Units (1)	ESPP (1)
Range of expected volatilities	36.3%	36.6 - 39.7%	35.7%	33.5 - 37.5%
Range of expected lives (in years)	N/A	0.5 - 2.0	N/A	0.5 - 2.0
Expected dividends	—%	—%	—%	—%
Range of risk-free interest rates	2.5%	2.4 - 2.5%	2.0%	1.9 - 2.3%

——————


(1)	There were no performance stock units or ESPP awards granted for the three months ended July 31, 2019 and 2018 where the fair value was estimated by a Monte Carlo simulation model or a BSM option pricing model, respectively.

Autodesk estimates expected volatility for stock-based awards based on the average of the following two measures: (1) a measure of historical volatility in the trading market for the Company’s common stock, and (2) the implied volatility of traded forward call options to purchase shares of the Company’s common stock. The expected volatility for performance stock units subject to market conditions includes the expected volatility of Autodesk's peer companies within the S&P North American Technology Software Index with a market capitalization over $2.0 billion, depending on the award type.

The range of expected lives of ESPP awards are based upon the four, six-month exercise periods within a 24-month offering period.

Autodesk does not currently pay, and does not anticipate paying in the foreseeable future, any cash dividends. Consequently, an expected dividend yield of zero is used in the BSM option pricing model and the Monte Carlo simulation model.

The risk-free interest rate used in the BSM option pricing model and the Monte Carlo simulation model for stock-based awards is the historical yield on U.S. Treasury securities with equivalent remaining lives.

Autodesk recognizes expense only for the stock-based awards that ultimately vest. Autodesk accounts for forfeitures of our stock-based awards as those forfeitures occur.

7. Income Tax

Autodesk had income tax expense of $26.3 million, relative to pre-tax income of $66.5 million for the three months ended July 31, 2019, and income tax expense of $16.0 million, relative to pre-tax losses of $23.4 million for the three months ended July 31, 2018. Autodesk had income tax expense of $59.1 million, relative to pre-tax income of $75.1 million for the six months ended July 31, 2019, and income tax expense of $34.6 million, relative to pre-tax loss of $87.2 million for the six months ended July 31, 2018. Income tax expense for the three and six months ended July 31, 2019, increased primarily due to increased foreign income taxes as a result of the increased foreign earnings and withholding taxes.

Autodesk regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, Autodesk considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, Autodesk considered cumulative losses as a significant source of negative evidence and maintained a valuation allowance against our deferred tax attributes in the U.S. and certain foreign jurisdictions as of July 31, 2019.

As of July 31, 2019, the Company had $214.4 million of gross unrecognized tax benefits, of which $196.7 million would reduce our valuation allowance, if recognized. The remaining $17.7 million would impact the effective tax rate, if recognized. It is possible that the amount of unrecognized tax benefits will change in the next twelve months; however, an estimate of the range of the possible change cannot be made at this time.

8. Other Intangible Assets, Net

Other intangible assets, including developed technologies, customer relationships, trade names, patents, user lists and the related accumulated amortization were as follows:



	July 31, 2019			January 31, 2019
Developed technologies, at cost	$	668.3		$	670.2
Customer relationships, trade names, patents, and user lists, at cost (1)	529.2			533.1
Other intangible assets, at cost (2)	1,197.5			1,203.3
Less: Accumulated amortization	(954.3		)	(922.5		)
Other intangible assets, net	$	243.2		$	280.8

_______________


(1)	Included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.


(2)	Includes the effects of foreign currency translation.

9. Goodwill

Goodwill consists of the excess of the consideration transferred over the fair value of net assets acquired in business combinations. The following table summarizes the changes in the carrying amount of goodwill for the six months ended July 31, 2019:



Balance as of January 31, 2019	$	2,600.0
Less: accumulated impairment losses as of January 31, 2019	(149.2		)
Net balance as of January 31, 2019	2,450.8
Effect of foreign currency translation and measurement period adjustments (1)	(19.0		)
Balance as of July 31, 2019	$	2,431.8

____________________

(1) Measurement period adjustments reflect revisions made to the Company's preliminary determination of estimated fair value of assets and liabilities assumed during the six months ending July 31, 2019.

Autodesk operates as a single operating segment and single reporting unit. As such, when Autodesk tests goodwill for impairment annually in its fourth fiscal quarter, it is performed on the Company's single reporting unit. Autodesk performs impairment testing more often if circumstances indicate a potential impairment may exist, or if events have affected the composition of reporting units.

When goodwill is assessed for impairment, Autodesk has the option to perform an assessment of qualitative factors of impairment (“optional assessment”) prior to necessitating a quantitative impairment test. Should the optional assessment be used for any given fiscal year, qualitative factors to consider include cost factors; financial performance; legal, regulatory, contractual, political, business, or other factors; entity specific factors; industry and market considerations, macroeconomic conditions, and other relevant events and factors affecting the reporting unit. If, after assessing the totality of events or circumstances, it is more likely than not that the fair value of the reporting unit is greater than its carrying value, then performing the quantitative impairment test is unnecessary.

The quantitative impairment test is necessary when either Autodesk does not use the optional assessment or, as a result of the optional assessment, it is not more likely than not that the fair value of the reporting unit is greater than its carrying value. In situations in which an entity's reporting unit is publicly traded, the fair value of the Company may be approximated by its market capitalization, in performing the quantitative impairment test.

Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. If impairment exists, the carrying value of the goodwill is reduced to fair value through an impairment charge recorded in our Condensed Consolidated Statements of Operations. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. The value of Autodesk’s goodwill could also be impacted by future adverse changes such as: (i) declines in Autodesk’s actual financial results, (ii) a sustained decline in Autodesk’s market capitalization, (iii) a significant slowdown in the worldwide economy or the industries Autodesk serves, or (iv) changes in Autodesk’s business strategy.

There was no goodwill impairment during the three and six months ended July 31, 2019.

10. Deferred Compensation

At July 31, 2019, Autodesk had marketable securities totaling $67.4 million, all of which related to investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. Of the $67.4 million related to the deferred compensation liability at July 31, 2019, $6.2 million was classified as current and $61.2 million was classified as non-current liabilities. Of the $60.3 million related to the deferred compensation liability at January 31, 2019, $5.0 million was classified as current and $55.3 million was classified as non-current liabilities. The securities are recorded in the Condensed Consolidated Balance Sheets under the current portion of "Marketable securities." The current and non-current portions of the liability are recorded in the Condensed Consolidated Balance Sheets under “Accrued compensation” and “Other liabilities,” respectively.

Costs to obtain a contract with a customer

Sales commissions earned by our internal sales personnel and our reseller partners are considered incremental and recoverable costs of obtaining a contract with a customer. The commission costs are capitalized and included in "Prepaid expenses and other current assets" and "Other assets" on our Condensed Consolidated Balance Sheets. The deferred costs are then amortized over the period of benefit. Autodesk determined that sales commissions earned by internal sales personnel that are related to contract renewals are commensurate with sales commissions earned on the initial contracts, and we determined the period of benefit to be the term of the respective customer contract. Commissions paid to our reseller partners that are related to contract renewals are not commensurate with commissions earned on the initial contract, and we determined the estimated period of benefit by taking into consideration customer retention data, customer contracts, our technology and other factors. Deferred costs are periodically reviewed for impairment. Amortization expense is included in sales and marketing expenses in the Condensed Consolidated Statements of Operations.

The ending balance of assets recognized from costs to obtain a contract with a customer was $78.6 million as of July 31, 2019, and $93.0 million as of January 31, 2019. Amortization expense related to assets recognized from costs to obtain a contract with a customer was $25.5 million and $50.2 million during the three and six months ended July 31, 2019, respectively. Amortization expense related to assets recognized from costs to obtain a contract with a customer was $26.9 million and $53.1 million during the three and six months ended July 31, 2018, respectively. Autodesk did not recognize any contract cost impairment losses during the six months ended July 31, 2019 and 2018.

11. Computer Equipment, Software, Furniture and Leasehold Improvements, Net

Computer equipment, software, furniture, leasehold improvements and the related accumulated depreciation were as follows:



	July 31, 2019			January 31, 2019
Computer hardware, at cost	$	180.0		$	190.2
Computer software, at cost	63.1			66.7
Leasehold improvements, land and buildings, at cost	262.9			247.8
Furniture and equipment, at cost	65.5			67.2
	571.5			571.9
Less: Accumulated depreciation	(420.1		)	(422.2		)
Computer software, hardware, leasehold improvements, furniture and equipment, net	$	151.4		$	149.7

12. Borrowing Arrangements

In December 2018, Autodesk entered into a credit agreement by and among Autodesk, the lenders from time to time party thereto and Citibank, N.A., as agent, which provides for an unsecured revolving loan facility in the aggregate principal amount of $650.0 million with an option, subject to customary conditions, to request an increase in the amount of the credit facility by up to an additional $350.0 million, and is available for working capital or other business needs. The credit agreement replaced and terminated Autodesk’s prior $400.0 million revolving credit facility. The credit agreement contains customary covenants that could, among other things, restrict the imposition of liens on Autodesk's assets, and restrict Autodesk's ability to incur additional indebtedness or make dispositions of assets if Autodesk fails to maintain compliance with the financial covenants. The credit agreement financial covenants consist of (1) a minimum interest coverage ratio of 2.50:1.0 starting with the fiscal quarter ending January 31, 2019, and increasing to 3.00:1.0 starting with the fiscal quarter ending April 30, 2019, and (2) a maximum leverage ratio of 3.50:1.0 starting with the fiscal quarter ending July 31, 2019, and dropping to 3.00:1.0 in the fiscal quarter ending January 31, 2020. At July 31, 2019, Autodesk was in compliance with the credit agreement covenants. Revolving loans under the credit agreement bear interest, at Autodesk's option, at either (i) a floating rate per annum equal to the base rate plus a margin of between 0.000% and 0.500%, depending on Autodesk’s Public Debt Rating (as defined in the credit agreement) or (ii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market, plus a margin of between 0.900% and 1.500%, depending on Autodesk’s Public Debt Rating. The maturity date on the credit agreement is December 2023. At July 31, 2019, Autodesk had no outstanding borrowings under the credit agreement.

In December 2018, Autodesk also entered into a Term Loan Agreement by and among Autodesk, the lenders from time to time party thereto and Citibank, N.A., as agent, which provides for a delayed draw term loan facility in the aggregate principal amount of $500.0 million and was borrowed in full to consummate the PlanGrid, Inc. acquisition. The term loan bears interest, at Autodesk's option, at either (i) a floating rate per annum equal to the base rate plus a margin between 0.000% and 0.625%, depending on Autodesk's Public Debt Rating or (ii) a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market, plus a margin of between 0.875% and 1.625%, depending on Autodesk's Public Debt Rating. Based on Autodesk's current credit ratings the term loan bears interest at a per annum rate equal to the rate at which dollar deposits are offered in the London interbank market, plus a margin of 1.125% per annum. Interest under the term loan was 3.398% at July 31, 2019. The Term Loan Agreement contains customary covenants that could, among other things, restrict the imposition of liens on Autodesk's assets, and restrict Autodesk’s ability to incur additional indebtedness or make dispositions of assets if Autodesk fails to maintain the financial covenants. The Term Loan Agreement has the same financial covenants as those included in the credit agreement governing its revolving loan facility described above. The term loan will mature on December 2020 and will not be subject to amortization prior to the maturity date. As of July 31, 2019, $250.0 million remains outstanding under the term loan.

In June 2017, Autodesk issued $500.0 million aggregate principal amount of 3.5% notes due June 15, 2027 (collectively, the “2017 Notes”). Net of a discount of $3.1 million and issuance costs of $4.9 million, Autodesk received net proceeds of $492.0 million from issuance of the 2017 Notes. Both the discount and issuance costs are being amortized to interest expense over the term of the 2017 Notes using the effective interest method. The proceeds of the 2017 Notes have been used for the repayment of $400.0 million of debt due December 15, 2017, and the remainder is available for general corporate purposes. Autodesk may redeem the 2017 Notes at any time, subject to a make whole premium. In addition, upon the occurrence of certain change of control triggering events, Autodesk may be required to repurchase the 2017 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 2017 Notes contain restrictive covenants that limit Autodesk's ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate or merge with, or convey, transfer or lease all or substantially all of its assets, subject to important qualifications and exceptions. Based on quoted market prices, the fair value of the 2017 Notes was approximately $508.9 million as of July 31, 2019.

In June 2015, Autodesk issued $450.0 million aggregate principal amount of 3.125% notes due June 15, 2020, and $300.0 million aggregate principal amount of 4.375% notes due June 15, 2025 (collectively, the “2015 Notes”). Net of a discount of $1.7 million and issuance costs of $6.3 million, Autodesk received net proceeds of $742.0 million from issuance of the 2015 Notes. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2015 Notes using the effective interest method. The proceeds of the 2015 Notes are available for general corporate purposes. Autodesk may redeem the 2015 Notes at any time, subject to a make whole premium. In addition, upon the occurrence of certain change of control triggering events, Autodesk may be required to repurchase the 2015 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 2015 Notes contain restrictive covenants that limit Autodesk's ability to create certain liens, to enter into certain sale and leaseback transactions and to consolidate or merge with, or convey, transfer or lease all or substantially all of its assets, subject to important qualifications and exceptions. Based on quoted market prices, the fair value of the 2015 Notes was approximately $772.5 million as of July 31, 2019. As of July 31, 2019, the $450.0 million 3.125% notes due June 15, 2020 are recorded in the Condensed Consolidated Balance Sheets under "Current portion of long-term notes payable, net," and the weighted average interest rate was 4.375%.

In December 2012, Autodesk issued $400.0 million aggregate principal amount of 1.95% notes due December 15, 2017 ("$400.0 million 2012 Notes") and $350.0 million aggregate principal amount of 3.6% notes due December 15, 2022 ("$350.0 million 2012 Notes" and collectively with the $400.0 million 2012 Notes, the “2012 Notes”). Autodesk received net proceeds of $739.3 million from issuance of the 2012 Notes, net of a discount of $4.5 million and issuance costs of $6.1 million. Both the discount and issuance costs are being amortized to interest expense over the respective terms of the 2012 Notes using the effective interest method. The proceeds of the 2012 Notes are available for general corporate purposes. On July 27, 2017, Autodesk redeemed in full the $400.0 million 2012 Notes. The redemption was completed pursuant to the optional redemption provisions of the first supplemental indenture dated December 13, 2012. To redeem the notes, Autodesk used the proceeds of the 2017 Notes to pay a redemption price of approximately $400.9 million, plus accrued and unpaid interest. Total cash repayment was $401.8 million. The Company did not incur any additional early termination penalties in connection with such redemption. Based on the quoted market price, the fair value of the $350.0 million 2012 Notes was approximately $358.1 million as of July 31, 2019.

13. Leases

Autodesk has operating leases for real estate, vehicles and certain equipment. Leases have remaining lease terms of less than 1 year to 71 years, some of which include options to extend the lease with renewal terms from 1 year to 10 years and some of which include options to terminate the leases from less than 1 year to 11 years. Options to extend the lease are included in the lease liability if they are reasonably certain of being exercised. Options to terminate are considered in determining the lease liability if they are reasonably certain of being exercised. The Company’s lease contracts include obligations to pay for other services, such as operations and maintenance. The Company’s leases do not contain residual value guarantees or material restrictive covenants.

The components of lease cost were as follows:



	Three Months Ended July 31, 2019
	Cost of subscription and maintenance revenue		Cost of other revenue		Marketing and sales		Research and development		General and administrative		Total
Operating lease cost	$	1.6	$	0.7	$	9.6	$	6.8	$	3.0	$	21.7
Variable lease cost	0.3		—		1.5		1.1		0.5		3.4



	Six Months Ended July 31, 2019
	Cost of subscription and maintenance revenue		Cost of other revenue		Marketing and sales		Research and development		General and administrative		Total
Operating lease cost	$	3.2	$	1.1	$	18.4	$	13.5	$	5.8	$	42.0
Variable lease cost	0.5		0.1		2.8		2.1		0.9		6.4

Supplemental operating cash flow information related to leases is as follows:



	Six Months Ended July 31,
	2019
Cash paid for operating leases included in operating cash flows(1)	$	45.9
Non-cash operating lease liabilities arising from obtaining operating lease right-of-use assets	$	53.0

_______________

(1) Includes $6.4 million in variable lease payments not included in "Operating lease liabilities" and "Long-term operating lease liabilities" on the Condensed Consolidated Balance Sheet.

The weighted average remaining lease term for operating leases is 6.0 years at July 31, 2019. The weighted average discount rate was 3.81% at July 31, 2019.

Maturities of operating lease liabilities were as follows:



Fiscal year ending
2020 (remainder)	$	37.5
2021	71.3
2022	67.2
2023	59.6
2024	46.3
Thereafter	74.0
	355.9
Less imputed interest	38.9
Present value of operating lease liabilities	$	317.0

As of July 31, 2019, Autodesk has additional operating lease minimum lease payments of $156.4 million for executed leases that have not yet commenced, primarily for office locations.

For the three and six months ended July 31, 2018, rent expense related to operating leases under previous accounting guidance was $15.4 million and $30.5 million, respectively.

14. Commitments and Contingencies

Guarantees and Indemnifications

In the normal course of business, Autodesk provides indemnifications of varying scopes, including limited product warranties and indemnification of customers against claims of intellectual property infringement made by third parties arising from the use of its products or services. Autodesk accrues for known indemnification issues if a loss is probable and can be reasonably estimated. Historically, costs related to these indemnifications have not been significant, and because potential future costs are highly variable, Autodesk is unable to estimate the maximum potential impact of these indemnifications on its future results of operations.

In connection with the purchase, sale or license of assets or businesses with third parties, Autodesk has entered into or assumed customary indemnification agreements related to the assets or businesses purchased, sold or licensed. Historically, costs related to these indemnifications have not been significant, and because potential future costs are highly variable, Autodesk is unable to estimate the maximum potential impact of these indemnifications on its future results of operations.

As permitted under Delaware law, Autodesk has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at Autodesk’s request in such capacity. The maximum potential amount of future payments Autodesk could be required to make under these indemnification agreements is unlimited; however, Autodesk has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable Autodesk to recover a portion of any future amounts paid. Autodesk believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

Legal Proceedings

Autodesk is involved in a variety of claims, suits, investigations, inquiries, and proceedings in the normal course of business including claims of alleged infringement of intellectual property rights, commercial, employment, tax, piracy prosecution, business practices and other matters. Autodesk routinely reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any matter is considered probable and the amount can be reasonably estimated, Autodesk records a liability for the estimated loss. Because of inherent uncertainties related to these legal matters, Autodesk bases its loss accruals on the best information available at the time. As additional information becomes available, Autodesk reassesses its potential liability and may revise its estimates. In the Company's opinion, resolution of pending matters is not expected to have a material adverse impact on its consolidated results of operations, cash flows, or its financial position. Given the unpredictable nature of legal proceedings, there is a reasonable possibility that an unfavorable resolution of one or more such proceedings could in the future materially affect the Company's results of operations, cash flows, or financial position in a particular period, however, based on the information known by the Company as of the date of this filing and the rules and regulations applicable to the preparation of the Company's financial statements, any such amount is either immaterial or it is not possible to provide an estimated amount of any such potential loss.

15. Stockholders' Deficit

Changes in stockholders' deficit by component, net of tax, as of July 31, 2019, are as follows:



	Common stock and additional paid-in capital					Accumulated other comprehensive loss			Accumulated deficit			Total stockholders' deficit
	Shares		Amount			Accumulated other comprehensive loss			Accumulated deficit			Total stockholders' deficit
Balances, January 31, 2019	219.4		$	2,071.5		$	(135.0	)	$	(2,147.4	)	$	(210.9	)
Common shares issued under stock plans	0.8		21.1			—			—			21.1
Stock-based compensation expense	—		75.2			—			—			75.2
Post-combination expense related to equity awards assumed	—		0.8			—			—			0.8
Cumulative effect of accounting changes	—		—			—			(0.7		)	(0.7		)
Net loss	—		—			—			(24.2		)	(24.2		)
Other comprehensive loss	—		—			(6.6		)	—			(6.6		)
Repurchase and retirement of common shares	(0.6	)	(45.5		)	—			(54.5		)	(100.0		)
Balances, April 30, 2019	219.6		2,123.1			(141.6		)	(2,226.8		)	(245.3		)
Common shares issued under stock plans	0.2		(2.6		)	—			—			(2.6		)
Stock-based compensation expense	—		82.9			—			—			82.9
Post-combination expense related to equity awards assumed	—		0.1			—						0.1
Net income	—		—			—			40.2			40.2
Other comprehensive loss	—		—			(29.1		)	—			(29.1		)
Repurchase and retirement of common shares (1)	(0.3	)	(2.8		)	—			(37.7		)	(40.5		)
Balances, July 31, 2019	219.5		$	2,200.7		$	(170.7	)	$	(2,224.3	)	$	(194.3	)

________________


(1)	During the three and six months ended July 31, 2019, Autodesk repurchased 0.3 million and 0.9 million shares at an average repurchase price of $159.54 and $168.11 per share, respectively. At July 31, 2019, 16.6 million shares remained available for repurchase under the repurchase program approved by the Board of Directors.

Changes in stockholders' deficit by component, net of tax, as of January 31, 2019 are as follows:



	Common stock and additional paid-in capital					Accumulated other comprehensive loss			Accumulated deficit			Total stockholders' deficit
	Shares		Amount			Accumulated other comprehensive loss			Accumulated deficit			Total stockholders' deficit
Balances, January 31, 2018	218.3		$	1,952.7		$	(123.8	)	$	(2,084.9	)	$	(256.0	)
Common shares issued under stock plans	1.0		10.3			—			—			10.3
Stock-based compensation expense	—		54.4			—			—			54.4
Cumulative effect of accounting changes	—		—			—			176.1			176.1
Net loss	—		—			—			(82.4		)	(82.4		)
Other comprehensive loss	—		—			(10.0		)	—			(10.0		)
Repurchase and retirement of common shares	(0.2	)	(16.4		)	—			(4.6		)	(21.0		)
Balances, April 30, 2018	219.1		2,001.0			(133.8		)	(1,995.8		)	(128.6		)
Common shares issued under stock plans	0.2		(12.9		)	—			—			(12.9		)
Stock-based compensation expense	—		56.9			—			—			56.9
Cumulative effect of accounting changes	—		—			—			1.4			1.4
Net loss	—		—			—			(39.4		)	(39.4		)
Other comprehensive loss	—		—			(17.1		)	—			(17.1		)
Shares issued for acquisition	0.3		44.8			—			—			44.8
Repurchase and retirement of common shares	(1.1	)	(77.3		)	—			(69.4		)	(146.7		)
Balances, July 31, 2018	218.5		2,012.5			(150.9		)	(2,103.2		)	(241.6		)
Common shares issued under stock plans	1.4		(28.0		)	—			—			(28.0		)
Stock-based compensation expense	—		64.2			—			—			64.2
Net loss	—		—			—			(23.7		)	(23.7		)
Other comprehensive loss	—		—			(6.6		)	—			(6.6		)
Repurchase and retirement of common shares	(0.8	)	(39.6		)	—			(63.0		)	(102.6		)
Balances, October 31, 2018	219.1		2,009.1			(157.5		)	(2,189.9		)	(338.3		)
Common shares issued under stock plans	0.4		(21.9		)	—			—			(21.9		)
Stock-based compensation expense	—		74.0			—			—			74.0
Purchase price accounting adjustment	—		10.3			—			—			10.3
Net income	—		—			—			64.7			64.7
Other comprehensive income	—		—			22.5			—			22.5
Repurchase and retirement of common shares	(0.1	)	—			—			(22.2		)	(22.2		)
Balances, January 31, 2019	219.4		$	2,071.5		$	(135.0	)	$	(2,147.4	)	$	(210.9	)

16. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of taxes, consisted of the following at July 31, 2019:



	Net Unrealized Gains (Losses) on Derivative Instruments			Net Unrealized Gains (Losses) on Available-for-Sale Debt Securities			Defined Benefit Pension Components			Foreign Currency Translation Adjustments			Total
Balances, January 31, 2019	$	15.0		$	3.3		$	(16.3	)	$	(137.0	)	$	(135.0	)
Other comprehensive income (loss) before reclassifications	5.1			1.2			—			(33.2		)	(26.9		)
Pre-tax losses reclassified from accumulated other comprehensive loss	(4.1		)	—			(2.9		)	—			(7.0		)
Tax effects	(2.0		)	(0.3		)	0.5			—			(1.8		)
Net current period other comprehensive (loss) income	(1.0		)	0.9			(2.4		)	(33.2		)	(35.7		)
Balances, July 31, 2019	$	14.0		$	4.2		$	(18.7	)	$	(170.2	)	$	(170.7	)

Reclassifications related to gains and losses on available-for-sale debt securities are included in "Interest and other (expense) income, net." Refer to Note 5, "Financial Instruments," for the amount and location of reclassifications related to derivative instruments. Reclassifications of the defined benefit pension components are included in the computation of net periodic benefit cost. For further information, see the "Retirement Benefit Plans" note in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended January 31, 2019.

17. Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding for the period, excluding stock options and restricted stock units. Diluted net income (loss) per share is based upon the weighted average number of shares of common stock outstanding for the period and potentially dilutive common shares, including the effect of stock options and restricted stock units under the treasury stock method. The following table sets forth the computation of the numerators and denominators used in the basic and diluted net income (loss) per share amounts:



	Three Months Ended July 31,					Six Months Ended July 31,
	2019		2018			2019		2018
Numerator:
Net income (loss)	$	40.2	$	(39.4	)	$	16.0	$	(121.8	)
Denominator:
Denominator for basic net income (loss) per share—weighted average shares	219.6		219.0			219.6		218.8
Effect of dilutive securities (1)	2.8		—			2.7		—
Denominator for dilutive net income (loss) per share	222.4		219.0			222.3		218.8
Basic net income (loss) per share	$	0.18	$	(0.18	)	$	0.07	$	(0.56	)
Diluted net income (loss) per share	$	0.18	$	(0.18	)	$	0.07	$	(0.56	)

____________________


(1)	The effect of dilutive securities of 3.2 million and 3.3 million shares in the three and six months ended July 31, 2018, respectively, have been excluded from the calculation of diluted net income (loss) per share as those shares would have been anti-dilutive due to the net loss incurred during those periods.

The computation of diluted net income (loss) per share does not include shares that are anti-dilutive under the treasury stock method because their exercise prices are higher than the average market value of Autodesk’s stock during the periods. There were no potentially anti-dilutive shares excluded from the computation of diluted net income (loss) per share for the three and six months ended July 31, 2019 and 2018, respectively.

18. Segments

Autodesk reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions, allocating resources and assessing performance as the source of the Company’s reportable segments. The Company's chief operating decision maker ("CODM") allocates resources and assesses the operating performance of the Company as a whole. As such, Autodesk has one segment manager (the CODM), and one operating segment.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion in our MD&A and elsewhere in this Form 10-Q contains trend analyses and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are any statements that look to future events and consist of, among other things, our business strategies, including those discussed in “Strategy” and “Overview of the Six Months Ended July 31, 2019 and 2018” below; future revenue, operating expenses, recurring revenue, annualized recurring revenue, cash flow, net revenue retention rate and other future financial results (by product type and geography); the effectiveness of our efforts to successfully manage transitions to new industries; our ability to increase our subscription base; expected market trends, including the growth of cloud and mobile computing; the availability of credit; the effect of unemployment; the effects of global economic conditions; the effects of revenue recognition; the effects of recently issued accounting standards; expected trends in certain financial metrics, including expenses; expectations regarding our cash needs; the effects of fluctuations in exchange rates and our hedging activities on our financial results; our ability to successfully expand adoption of our products; our ability to gain market acceptance of new business and sales initiatives; the impact of past acquisitions, including our integration efforts; the impact of economic volatility and geopolitical activities in certain countries, particularly emerging economy countries; the timing and amount of purchases under our stock buy-back plan; and the effects of potential non-cash charges on our financial results and the resulting effect on our financial results. In addition, forward-looking statements also consist of statements involving expectations regarding product capability and acceptance, statements regarding our liquidity and short-term and long-term cash requirements, as well as statements involving trend analyses and statements including such words as “may,” “believe,” “could,” “anticipate,” “would,” “might,” “plan,” “expect,” and similar expressions or the negative of these terms or other comparable terminology. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of a number of factors, including those set forth below in Part II, Item 1A, “Risk Factors,” and in our other reports filed with the U.S. Securities and Exchange Commission. We assume no obligation to update the forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

Note: A glossary of terms used in this Form 10-Q appears at the end of this Item 2.

Strategy

Autodesk makes software for people who make things. If you have ever driven a high-performance car, admired a towering skyscraper, used a smartphone, or watched a great film, chances are you have experienced what millions of Autodesk customers are doing with our software. Autodesk gives you the power to make anything.

Autodesk was founded during the platform transition from mainframe computers and engineering workstations to personal computers. We developed and sustained a compelling value proposition based upon desktop software for the personal computer. Just as the transition from mainframes to personal computers transformed the industry over 30 years ago, the software industry has undergone a transition from developing and selling perpetual licenses and on-premises products to cloud, mobile and social applications.

To address this shift, Autodesk made a strategic decision to shift its business model from selling perpetual licenses and maintenance plans to selling subscriptions.

Today, we offer subscriptions for individual products and Industry Collections, flexible enterprise business agreements ("EBAs"), and cloud service offerings (collectively referred to as "subscription plan"). Subscription plans are designed to give our customers more flexibility with how they use our offerings and to attract a broader range of customers, such as project-based users and small businesses.

Our product subscriptions currently represent a hybrid of desktop software and cloud functionality, which provides a device-independent, collaborative design workflow for designers and their stakeholders. Our cloud offerings, for example, BIM 360, Shotgun, Fusion, and AutoCAD 360 Pro, provide tools, including mobile and social capabilities, to streamline design, collaboration, building and manufacturing and data management processes. We believe that customer adoption of these new offerings will continue to grow as customers across a range of industries begin to take advantage of the scalable computing power and flexibility provided through these new services.

Industry Collections provide our customers with increased access to a broader selection of Autodesk solutions and services that exceeds those previously available in suites — simplifying the customers' ability to get access to a complete set of tools for their industry.

We discontinued the sale of new commercial licenses of most individual software products in 2016. Additionally, in June 2017, we commenced a three-year program to incentivize maintenance plan customers to move to subscription plan offerings, maintenance-to-subscription ("M2S"), while at the same time increasing maintenance plan pricing over time for customers that remain on maintenance plans. Since launching the program, a substantial majority of maintenance plan customers have converted to subscription plan offerings.

To support our strategic priority of re-imagining construction, in fiscal 2019, we strengthened the foundation of our construction solutions with both organic and inorganic investments. In addition to investing in our BIM 360 portfolio, we acquired Assemble Systems, Inc. ("Assemble Systems") for quantity take off functionality, PlanGrid, Inc. ("PlanGrid") for document-centric workflows and field execution, and BuildingConnected, Inc. ("BuildingConnected") for bidding and estimation processes. The broadened product portfolio will help us expand our presence with sub-contractors, trades people, and building owners.

As part of our manufacturing strategy, we continue to attract global manufacturing leaders with our generative design and our Fusion technology enhancements.

We sell our products and services globally, through a combination of indirect and direct channels. Our indirect channels include value added resellers, direct market resellers, distributors, computer manufacturers, and other software developers. Our direct channels include internal sales resources dedicated to selling in our largest accounts, our highly specialized products, and business transacted through our online Autodesk branded store. See Note 3, "Revenue Recognition" in the Notes to the unaudited Condensed Consolidated Financial Statements for further detail on net revenue by indirect and direct channel sales for the three and six months ended July 31, 2019 and 2018.

We anticipate that our channel mix will continue to change as we scale our online Autodesk branded store business and our largest accounts shift towards direct-only business models. However, we expect our indirect channel will continue to transact and support the majority of our customers and revenue. We employ a variety of incentive programs and promotions to align our direct and indirect channels with our business strategies. In addition, we have a worldwide user group organization and we have created online user communities dedicated to the exchange of information related to the use of our products.

One of our key strategies is to maintain an open-architecture design of our software products to facilitate third-party development of complementary products and industry-specific software solutions. This approach enables customers and third parties to customize solutions for a wide variety of highly specific uses. We offer several programs that provide strategic investment funding, technological platforms, user communities, technical support, forums, and events to developers who develop add-on applications for our products. For example, we have established the Autodesk Forge program to support innovators that build solutions to facilitate the development of a single connected ecosystem for the future of how things are designed, made, and used as well as support ideas that push the boundaries of 3D printing.

In addition to the competitive advantages afforded by our technology, our large global network of distributors, resellers, third-party developers, customers, educational institutions, educators, and students is a key competitive advantage which has been cultivated over an extensive period of time. This network of partners and relationships provides us with a broad and deep reach into volume markets around the world. Our distributor and reseller network is extensive and provides our customers with the resources to purchase, deploy, learn, and support our solutions quickly and easily. We have a significant number of registered third-party developers who create products that work well with our solutions and extend them for a variety of specialized applications.

Autodesk is committed to helping fuel a lifelong passion for making with students of all ages. We offer free educational licenses of Autodesk software worldwide to students, educators, and accredited educational institutions. We inspire and support beginners with Tinkercad, a simple online 3D design and 3D printing tool. Through Autodesk Design Academy, we provide

secondary and postsecondary school markets hundreds of standards-aligned class projects to support design-based disciplines in Science, Technology, Engineering, Digital Arts, and Math (STEAM) while using Autodesk's professional-grade 3D design, engineering and entertainment software used in industry. We also have made Autodesk Design Academy curricula available on Udemy and Coursera. Our intention is to make Autodesk software ubiquitous and the design and making software of choice for those poised to become the next generation of professional users.

Our strategy includes improving our product functionality and expanding our product offerings through internal development as well as through the acquisition of products, technology, and businesses. For example, in fiscal 2019, we acquired Assemble Systems, a leading provider of key workflow software solutions, PlanGrid, a leading provider of construction productivity software, and BuildingConnected, a leading pre-construction platform. We believe that the acquisitions of Assemble Systems, PlanGrid and BuildingConnected will enable us to offer a more comprehensive, cloud-based construction platform. Acquisitions often increase the speed at which we can deliver product functionality to our customers; however, they entail cost and integration challenges and may, in certain instances, negatively impact our operating margins. We continually review these trade-offs in making decisions regarding acquisitions. We currently anticipate that we will continue to acquire products, technology, and businesses as compelling opportunities become available.

In our current business model, annualized recurring revenue ("ARR"), growth of billings, and remaining performance obligations better reflect business momentum. To analyze progress, we have disaggregated our growth between the original maintenance model ("maintenance plan") and the subscription plan model. Maintenance plan subscriptions peaked in the fourth quarter of our fiscal 2016 as we discontinued selling new maintenance plan subscriptions in fiscal 2017, and we expect the number of these subscriptions to keep declining over time as maintenance plan customers continue to convert to our subscription plans.

Our strategy depends upon a number of assumptions, including: making our technology available to mainstream markets; leveraging our large global network of distributors, resellers, third-party developers, customers, educational institutions, and students; improving the performance and functionality of our products; and adequately protecting our intellectual property. If the outcome of any of these assumptions differs from our expectations, we may not be able to implement our strategy, which could potentially adversely affect our business. For further discussion regarding these and related risks, see Part II, Item 1A, “Risk Factors.”

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). In preparing our Condensed Consolidated Financial Statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in our Condensed Consolidated Financial Statements. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We regularly reevaluate our assumptions, judgments and estimates. Our significant accounting policies are described in Note 1, “Business and Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in our Form 10-K for the fiscal year ended January 31, 2019. In addition, we highlighted those policies that involve a higher degree of judgment and complexity with further discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K. There have been no material changes to our critical accounting policies and estimates during the three months ended July 31, 2019, as compared to those disclosed in our Form 10-K for the fiscal year ended January 31, 2019. We believe these policies are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Overview of the Three and Six Months Ended July 31, 2019 and 2018


•	Total net revenue increased 30% and 31% to $796.8 million and $1.53 billion for the three and six months ended July 31, 2019, respectively, compared to the same periods in the prior fiscal year.


•	Total ARR was $3.1 billion, an increase of 31% compared to the second quarter in the prior fiscal year.


•	Subscription plan ARR was $2.7 billion, an increase of 58% compared to the second quarter in the prior fiscal year.


•	Deferred revenue was $2.25 billion, an increase of 8% compared to the fourth quarter in the prior fiscal year. Remaining performance obligations (short-term and long-term deferred revenue plus unbilled deferred revenue) was $2.81 billion, an increase of 5% compared to the fourth quarter in the prior fiscal year.

Revenue Analysis

Net revenue increased during the three and six months ended July 31, 2019, as compared to the same periods in the prior fiscal year, primarily due to the respective 58% and 63% increase in subscription revenue, partially offset by a 38% decrease in maintenance revenue for both periods primarily as a result of the program to migrate customers from maintenance plans to subscription plans.

For further discussion of the drivers of these results, see below under the heading “Results of Operations.”

We rely significantly upon major distributors and resellers in both the U.S. and international regions, including Tech Data Corporation and its global affiliates (collectively, “Tech Data”). Total sales to Tech Data accounted for 35% of Autodesk’s total net revenue for both the three and six months ended July 31, 2019, and 35% for both the three and six months ended July 31, 2018. During the three and six months ended July 31, 2019, Ingram Micro accounted for 10% of Autodesk's total net revenue. During the three and six months ended July 31, 2018, Ingram Micro accounted for 11% of Autodesk's total net revenue. Our customers through Tech Data and Ingram Micro are the resellers and end users who purchase our software subscriptions and services. Should any of our agreements with Tech Data and Ingram Micro be terminated for any reason, we believe the resellers and end users who currently purchase our products through Tech Data and Ingram Micro would be able to continue to do so under substantially the same terms from one of our many other distributors without substantial disruption to our revenue. Consequently, we believe our business is not substantially dependent on Tech Data and Ingram Micro.

Recurring Revenue and Net Revenue Retention Rate

In order to help better understand our financial performance, we use metrics such as recurring revenue, ARR and net revenue retention rate ("NR3"). Recurring revenue, ARR and NR3 are performance metrics and should be viewed independently of revenue and deferred revenue as recurring revenue, ARR and NR3 are not intended to be combined with those items. Our determination and presentation may differ from that of other companies. Please refer to the Glossary of Terms for the definitions of these metrics.

The following table outlines our recurring revenue metric for the three and six months ended July 31, 2019 and 2018:



	Three Months Ended July 31, 2019			Change compared to prior fiscal year				Three Months Ended July 31, 2018
(In millions, except percentage data)	Three Months Ended July 31, 2019			$		%		Three Months Ended July 31, 2018
Recurring Revenue (1)	$	767.2		$	180.4	31	%	$	586.8
As a percentage of net revenue	96		%	N/A		N/A		96		%

	Six Months Ended July 31, 2019			Change compared to prior fiscal year				Six Months Ended July 31, 2018
	Six Months Ended July 31, 2019			$		%		Six Months Ended July 31, 2018
Recurring Revenue (1)	$	1,475.0		$	356.6	32	%	$	1,118.4
As a percentage of net revenue	96		%	N/A		N/A		95		%

________________


(1)	The acquisition of a business may cause variability in the comparison of recurring revenue in this table above and recurring revenue derived from the revenue reported in the Condensed Consolidated Statements of Operations.

The following table outlines our ARR metric as of July 31, 2019, April 30, 2019 and January 31, 2019.



	As of July 31, 2019		Change compared to prior quarter end					As of April 30, 2019		As of July 31, 2019		Change compared to prior fiscal year end					As of January 31, 2019
	As of July 31, 2019		$			%		As of April 30, 2019		As of July 31, 2019		$			%		As of January 31, 2019
Subscription plan ARR	$	2,654.8	$	271.5		11	%	$	2,383.3	$	2,654.8	$	454.7		21	%	$	2,200.1
Maintenance plan ARR	414.0		(33.9		)	(8	)%	447.9		414.0		(135.3		)	(25	)%	549.3
Total ARR (1)	$	3,068.8	$	237.6		8	%	$	2,831.2	$	3,068.8	$	319.4		12	%	$	2,749.4

________________


(1)	The acquisition of a business may cause variability in the comparison of ARR reported in this table above and ARR derived from the revenue reported in the Condensed Consolidated Statements of Operations.

Total ARR increased 8% as of July 31, 2019, as compared to the three months ended April 30, 2019, and 12% as compared to the end of fiscal 2019, primarily due to an 11% and 21% increase, in the respective periods, in subscription plan ARR primarily driven by product subscriptions, including the maintenance-to-subscription ("M2S") program. The increase was partially offset by an 8% and 25% decrease, in the respective periods, in maintenance plan ARR driven by the M2S program.

NR3 was within the range of 110% and 120% as of July 31, 2019 and 2018.

Foreign Currency Analysis

We generate a significant amount of our revenue in the United States, Japan, Germany, the United Kingdom, and Finland.

The following table shows the impact of foreign exchange rate changes on our net revenue and total spend:



	Three Months Ended July 31, 2019					Six Months Ended July 31, 2019
	Percent change compared to prior fiscal year		Constant Currency percent change compared to prior fiscal year (1)		Positive/Negative/Neutral impact from foreign exchange rate changes	Percent change compared to prior fiscal year		Constant Currency percent change compared to prior fiscal year (1)		Positive/Negative/Neutral impact from foreign exchange rate changes
Net revenue	30	%	30	%	Neutral	31	%	30	%	Positive
Total spend (2)	14	%	15	%	Positive	15	%	16	%	Positive

________________


(1)	Please refer to the Glossary of Terms for the definitions of our constant currency growth rates.


(2)	Total spend is the sum of total cost of revenue and total operating expenses.

Changes in the value of the U.S. dollar may have a significant effect on net revenue, total spend, and income (loss) from operations in future periods. We use foreign currency contracts to reduce the exchange rate effect on a portion of the net revenue of certain anticipated transactions but do not attempt to completely mitigate the impact of fluctuations of such foreign currency against the U.S. dollar.

Remaining Performance Obligations

Remaining performance obligations represent deferred revenue and contractually stated or committed orders under early renewal and multi-year billing plans for subscription, services, license and maintenance for which the associated deferred revenue has not yet been recognized. Unbilled deferred revenue is not included as a receivable or deferred revenue on our Condensed Consolidated Balance Sheets. See Note 3, “Revenue Recognition” for more details on Autodesk's performance obligations.



(in millions)	July 31, 2019		January 31, 2019
Deferred revenue	$	2,249.5	$	2,091.4
Unbilled deferred revenue	563.0		591.0
Remaining performance obligations	$	2,812.5	$	2,682.4

Balance Sheet and Cash Flow Items

At July 31, 2019, we had $991.3 million in cash and marketable securities. Our cash flow from operations increased to $440.5 million for the six months ended July 31, 2019, compared to $26.4 million for the six months ended July 31, 2018. We repurchased 0.9 million shares of our common stock for $140.5 million during the six months ended July 31, 2019. Comparatively, we repurchased 1.3 million shares of our common stock for $167.7 million during the six months ended July 31, 2018. See further discussion regarding the balance sheet and cash flow activities under the heading “Liquidity and Capital Resources.”

Results of Operations

Net Revenue

Net Revenue by Income Statement Presentation

Subscription revenue consists of our term-based product subscriptions, cloud service offerings, and flexible enterprise

business arrangements. Revenue from these arrangements is recognized ratably over the contract term commencing with the date our service is made available to customers and when all other revenue recognition criteria have been satisfied.

Maintenance revenue consists of renewal fees for existing maintenance plan agreements that were initially purchased with a perpetual software license. Under our maintenance plan, customers are eligible to receive unspecified upgrades, when and if available, and technical support. We recognize maintenance revenue ratably over the term of the agreements, which is generally one year.

Other revenue consists of revenue from consulting, training and other services, and is recognized over time as the services are performed. Other revenue also includes software license revenue from the sale of products which do not incorporate substantial cloud services and is recognized up front.



	Three Months Ended		Change compared to prior fiscal year					Three Months Ended		Management comments
(In millions, except percentages)	July 31, 2019		$			%		July 31, 2018		Management comments
Net Revenue:
Subscription	$	663.7	$	243.1		58	%	$	420.6	Up due to growth across all subscription plan types, led by renewal product subscription revenue, which benefited from the success of the M2S program. Also contributing to the increase was growth in new product subscriptions, cloud service offerings (which benefited from our acquisitions in the fourth quarter of fiscal year 2019) and EBA offerings.
Maintenance (1)	103.5		(62.9		)	(38	)%	166.4		Down primarily due to the migration of maintenance plan subscriptions to subscription plan subscriptions with the M2S program.
Total subscription and maintenance revenue	767.2		180.2			31	%	587.0
Other	29.6		4.9			20	%	24.7
	$	796.8	$	185.1		30	%	$	611.7

	Six Months Ended		Change compared to prior fiscal year					Six Months Ended		Management Comments
	July 31, 2019		$			%		July 31, 2018		Management Comments
Net Revenue:
Subscription	$	1,259.5	$	488.5		63	%	$	771.0	Up due to growth across all subscription plan types, led by renewal product subscription revenue, which benefited from the success of the M2S program. Also contributing to the increase was growth in new product subscriptions, cloud service offerings and EBA offerings.
Maintenance (1)	215.5		(132.1		)	(38	)%	347.6		Down primarily due to the migration of maintenance plan subscriptions to subscription plan subscriptions with the M2S program.
Total subscription and maintenance revenue	1,475.0		356.4			32	%	1,118.6
Other	57.3		4.3			8	%	53.0
	$	1,532.3	$	360.7		31	%	$	1,171.6

____________________


(1)	We expect maintenance revenue will slowly decline; however, the rate of decline will vary based on the number of renewals, the renewal rate, and our ability to incentivize maintenance plan customers to switch over to subscription plan offerings.

Net Revenue by Product Family

Our product offerings are focused in four primary product families: Architecture, Engineering and Construction ("AEC"), AutoCAD and AutoCAD LT, Manufacturing ("MFG"), and Media and Entertainment ("M&E").



	Three Months Ended		Change compared to prior fiscal year				Three Months Ended		Management comments
(In millions, except percentages)	July 31, 2019		$		%		July 31, 2018		Management comments
Net Revenue by Product Family:
AEC	$	334.2	$	91.1	37	%	$	243.1	Up due to increases in revenue from AEC Collections, PlanGrid, EBAs, and BIM 360.
AutoCAD and AutoCAD LT	231.3		54.7		31	%	176.6		Up due to increases in revenue from both AutoCAD and AutoCAD LT.
MFG	174.6		28.5		20	%	146.1		Up due to increases in revenue from MFG Collections and EBAs.
M&E	50.8		9.1		22	%	41.7		Up due to increases in revenue from EBAs, M&E Collections, Maya, and 3DS Max.
Other	5.9		1.7		40	%	4.2
	$	796.8	$	185.1	30	%	$	611.7

	Six Months Ended		Change compared to prior fiscal year				Six Months Ended
	July 31, 2019		$		%		July 31, 2018
Net Revenue by Product Family:
AEC	$	638.5	$	173.6	37	%	$	464.9	Up due to increases in revenue from AEC Collections, PlanGrid, EBAs, and BIM 360.
ACAD and AutoCAD LT	444.5		112.3		34	%	332.2		Up due to increases in revenue from both AutoCAD and AutoCAD LT.
MFG	342.1		60.6		22	%	281.5		Up due to increases in revenue from MFG Collections and EBAs.
M&E	96.3		12.8		15	%	83.5		Up due to increases in revenue from M&E Collections, Maya, EBAs, and 3DS Max.
Other	10.9		1.4		15	%	9.5
	$	1,532.3	$	360.7	31	%	$	1,171.6

Net Revenue by Geographic Area



	Three Months Ended July 31, 2019		Change compared to prior fiscal year				Constant currency change compared to prior fiscal year		Three Months Ended July 31, 2018
(In millions, except percentages)	Three Months Ended July 31, 2019		$		%		%		Three Months Ended July 31, 2018
Net Revenue:
Americas
U.S.	$	267.9	$	62.7	31	%	*		$	205.2
Other Americas	58.0		15.7		37	%	*		42.3
Total Americas	325.9		78.4		32	%	32	%	247.5
EMEA	316.2		67.9		27	%	26	%	248.3
APAC	154.7		38.8		33	%	35	%	115.9
Total Net Revenue	$	796.8	$	185.1	30	%	30	%	$	611.7

Emerging Economies	$	97.4	$	23.2	31	%