Autodesk has been closely watched by the market over the past year to see how the company’s transition from a perpetual license to a subscription business model fares.
Autodesk has explained recent financial performance, which saw revenue decrease by 18%, as the result of, “undergoing a business model transition in which it has discontinued most new perpetual license sales in favor of subscriptions and flexible license arrangements.” A more detailed explanation from the company’s 8-K filing reads – “During the transition, revenue, margins, EPS, deferred revenue and cash flow from operations will be impacted as more revenue is recognized ratably rather than up front and as new product offerings generally have a lower initial purchase price.” Bass adds, “New model subscription additions more than tripled year-over-year to 168,000 while the maintenance subscriptions declined as expected by 34,000 during the quarter.”
This shift should, in theory, result in a smoother flow of revenue but a primary motivating factor for Autodesk moving to this subscription model is to prevent piracy of their products. The makers of another widely used software suite, Adobe have also moved to a subscription model, again in an effort to recover the value that is currently lost from unauthorized versions of tools such as Photoshop, Illustrator, and Premiere Pro.
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And check out how Zuora helps companies such as Autodesk successfully transition to the Subscription Economy here.