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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 October 31, 2023
or
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)
Delaware94-2819853
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer
Identification No.)
One Market Street, Ste. 400
San Francisco, California94105
(Address of principal executive offices)(Zip Code)
(415507-5000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareADSKThe 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.



Large accelerated filer  Accelerated filer
Non-accelerated filer  Smaller reporting company
  Emerging growth company

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 November 27, 2023, registrant had outstanding 213,915,325 shares of common stock.



AUTODESK, INC. FORM 10-Q
TABLE OF CONTENTS
  Page No.
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




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 October 31,Nine Months Ended October 31,
 2023202220232022
Net revenue:
Subscription$1,314 $1,188 $3,777 $3,437 
Maintenance 12 16 40 51 
Total subscription and maintenance revenue
1,326 1,204 3,817 3,488 
Other88 76 211 199 
Total net revenue1,414 1,280 4,028 3,687 
Cost of revenue:
Cost of subscription and maintenance revenue94 86 285 253 
Cost of other revenue21 19 62 59 
Amortization of developed technologies12 15 34 44 
Total cost of revenue127 120 381 356 
Gross profit1,287 1,160 3,647 3,331 
Operating expenses:
Marketing and sales439 454 1,344 1,306 
Research and development339 311 1,021 906 
General and administrative165 129 438 377 
Amortization of purchased intangibles 10 10 31 30 
Total operating expenses953 904 2,834 2,619 
Income from operations334 256 813 712 
Interest and other expense, net(14)(14)(14)(43)
Income before income taxes320 242 799 669 
Provision for income taxes(79)(44)(175)(139)
Net income $241 $198 $624 $530 
Basic net income per share$1.13 $0.92 $2.92 $2.44 
Diluted net income per share$1.12 $0.91 $2.89 $2.43 
Weighted average shares used in computing basic net income per share214 216 214 217 
Weighted average shares used in computing diluted net income per share216 217 216 218 

See accompanying Notes to Condensed Consolidated Financial Statements.

4


AUTODESK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
Net income $241 $198 $624 $530 
Other comprehensive income (loss), net of reclassifications:
Net gain (loss) on derivative instruments (net of tax effect of zero, $(5), $3, and $(17), respectively)
4 26 (22)99 
Change in net unrealized (loss) gain on available-for-sale debt securities (net of tax effect of zero for all periods presented)
(1) (2)3 
Net change in cumulative foreign currency translation loss (net of tax effect of zero, zero, $5, and $1, respectively)
(62)(64)(48)(185)
Total other comprehensive loss(59)(38)(72)(83)
Total comprehensive income $182 $160 $552 $447 

See accompanying Notes to Condensed Consolidated Financial Statements.

5


AUTODESK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
 
October 31, 2023January 31, 2023
ASSETS
Current assets:
Cash and cash equivalents$1,526 $1,947 
Marketable securities428 125 
Accounts receivable, net579 961 
Prepaid expenses and other current assets406 308 
Total current assets2,939 3,341 
Long-term marketable securities219 102 
Computer equipment, software, furniture and leasehold improvements, net128 144 
Operating lease right-of-use assets237 245 
Intangible assets, net411 407 
Goodwill3,604 3,625 
Deferred income taxes, net1,122 1,014 
Long-term other assets566 560 
Total assets$9,226 $9,438 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$127 $102 
Accrued compensation378 358 
Accrued income taxes64 33 
Deferred revenue3,120 3,203 
Operating lease liabilities71 85 
Other accrued liabilities152 219 
Total current liabilities3,912 4,000 
Long-term deferred revenue903 1,377 
Long-term operating lease liabilities294 300 
Long-term income taxes payable161 164 
Long-term deferred income taxes 31 32 
Long-term notes payable, net2,283 2,281 
Long-term other liabilities160 139 
Stockholders’ equity:
Common stock and additional paid-in capital3,678 3,325 
Accumulated other comprehensive loss(257)(185)
Accumulated deficit(1,939)(1,995)
Total stockholders’ equity 1,482 1,145 
Total liabilities and stockholders’ equity $9,226 $9,438 

See accompanying Notes to Condensed Consolidated Financial Statements.

6


AUTODESK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
 Nine Months Ended October 31,
 20232022
Operating activities:
Net income $624 $530 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion102 113 
Stock-based compensation expense544 493 
Deferred income taxes(116)(98)
Lease-related asset impairments7 21 
Other(15)13 
Changes in operating assets and liabilities, net of business combinations:
Accounts receivable380 70 
Prepaid expenses and other assets (51)1 
Accounts payable and other liabilities (77)(76)
Deferred revenue(551)14 
Accrued income taxes29 79 
Net cash provided by operating activities
876 1,160 
Investing activities:
Purchases of marketable securities(944)(199)
Sales and maturities of marketable securities529 302 
Capital expenditures(21)(32)
Purchases of intangible assets(25)(6)
Business combinations, net of cash acquired(44)(96)
Other investing activities(19)(53)
Net cash used in investing activities(524)(84)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs130 124 
Taxes paid related to net share settlement of equity awards (153)(127)
Repurchases of common stock(730)(894)
Net cash used in financing activities(753)(897)
Effect of exchange rate changes on cash and cash equivalents(20)(42)
Net decrease in cash and cash equivalents(421)137 
Cash and cash equivalents at beginning of period1,947 1,528 
Cash and cash equivalents at end of period$1,526 $1,665 
Supplemental cash flow disclosure:
Non-cash financing activities:
Fair value of common stock issued to settle liability-classified restricted common stock$9 $8 
Fair value of common stock issued related to business combinations $ $10 

See accompanying Notes to Condensed Consolidated Financial Statements.
7


AUTODESK, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(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 October 31, 2023, and for the three and nine months ended October 31, 2023 and 2022, 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 nine months ended October 31, 2023, are not necessarily indicative of the results for the entire fiscal year ending January 31, 2024, or for any other period. Further, the balance sheet as of January 31, 2023, 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, 2023. 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, 2023, filed on March 14, 2023.

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 nine months ended October 31, 2023, that are applicable to the Company.

Recently Issued Accounting Standards But Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which are intended to improve reportable segment disclosure requirements. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for Autodesk’s fiscal year beginning February 1, 2024, and interim periods for Autodesk’s fiscal year beginning February 1, 2025, and should be applied on a retrospective basis to all periods presented. Autodesk is currently evaluating the effect of adopting ASU 2023-07 on its disclosures.

Accounting Standards Adopted

In June 2022, the FASB issued ASU No. 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”), which applies to all equity securities measured at fair value that are subject to contractual sale restrictions. ASU 2022-03 prohibits entities from taking into account contractual restrictions on the sale of equity securities when estimating fair value and introduces required disclosures for such transactions. ASU 2022-03 is effective for Autodesk's fiscal year beginning February 1, 2024, and interim periods within that fiscal year, with early adoption permitted. Autodesk adopted ASU 2022-03 as of February 1, 2023. The adoption of ASU 2022-03 did not have a material impact on Autodesk’s consolidated financial statements.

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3. Revenue Recognition

Revenue Disaggregation

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

Information regarding the components of Autodesk's net revenue from contracts with customers by product family, geographic location, sales channel, and product type is as follows: 
 Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
Net revenue by product family:
Architecture, Engineering and Construction $675 $575 $1,884 $1,676 
AutoCAD and AutoCAD LT 372 354 1,085 1,025 
Manufacturing269 254 771 721 
Media and Entertainment73 78 218 217 
Other 25 19 70 48 
Total net revenue$1,414 $1,280 $4,028 $3,687 
Net revenue by geographic area:
Americas
U.S.$520 $447 $1,461 $1,269 
Other Americas120 94 321 271 
Total Americas640 541 1,782 1,540 
Europe, Middle East and Africa516 476 1,496 1,398 
Asia Pacific258 263 750 749 
Total net revenue$1,414 $1,280 $4,028 $3,687 
Net revenue by sales channel:
Indirect$876 $827 $2,546 $2,412 
Direct538 453 1,482 1,275 
Total net revenue$1,414 $1,280 $4,028 $3,687 
Net revenue by product type:
Design$1,192 $1,087 $3,432 $3,155 
Make134 117 385 333 
Other88 76 211 199 
Total net revenue$1,414 $1,280 $4,028 $3,687 
Payments for product subscriptions, cloud subscriptions, and maintenance subscriptions are typically due in annual installments or 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 short-term, long-term, and unbilled deferred revenue. As of October 31, 2023, Autodesk had remaining performance obligations of $5.24 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 $3.52 billion or 67% of our remaining performance obligations as revenue during the next 12 months. We expect to recognize the remaining $1.72 billion or 33% of our remaining performance obligations as revenue thereafter.
9



The amount of remaining performance obligations may be impacted by the specific timing, duration, and size of customer subscription and support 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 October 31, 2023. 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 three months ended October 31, 2023 and 2022, that was included in the deferred revenue balances at January 31, 2023 and 2022, was $730 million and $642 million, respectively. Revenue recognized during the nine months ended October 31, 2023 and 2022, that was included in the deferred revenue balances at January 31, 2023 and 2022, was $2.71 billion and $2.46 billion, respectively. The satisfaction of performance obligations typically lags behind payments received under revenue contracts from customers.

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 $1.5 billion revolving credit facility. See Note 13, “Borrowing Arrangements,” in the Notes to Condensed Consolidated Financial Statements for further discussion.

Total sales to the Company's largest distributor TD Synnex Corporation and its global affiliates (“TD Synnex”) accounted for 39% and 40% of Autodesk’s total net revenue during the three and nine months ended October 31, 2023, respectively. Total sales to TD Synnex accounted for 37% of Autodesk’s total net revenue for both the three and nine months ended October 31, 2022. The majority of the net revenue from sales to TD Synnex is for sales outside of the United States. In addition, TD Synnex accounted for 18% and 27% of trade accounts receivable at October 31, 2023 and January 31, 2023, respectively. Ingram Micro Inc. (“Ingram Micro”), our second largest distributor, accounted for 7% and 8% of Autodesk's total net revenue during the three and nine months ended October 31, 2023, respectively. Total sales to Ingram Micro accounted for 9% of Autodesk’s total net revenue during both the three and nine months ended October 31, 2022. No other customer accounted for more than 10% of Autodesk's total net revenue or trade accounts receivable for each of the respective periods.
10


5. Financial Instruments

The following tables summarize the Company's financial instruments by significant investment category as of October 31, 2023, and January 31, 2023:
October 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Cash equivalents (1):
Money market funds$546 $— $— $546 
Commercial paper 257 — — 257 
Certificates of deposit69 — — 69 
Other (2)14 — — 14 
Marketable securities:
Short-term
Commercial paper207 — — 207 
U.S. government securities90 — — 90 
Corporate debt securities71 — — 71 
Asset-backed securities32 — — 32 
Agency discount notes11 — — 11 
Other (3)17 — — 17 
Long-term
Corporate debt securities97  (1)96 
Asset-backed securities55  (1)54 
Agency mortgage backed securities35  (1)34 
U.S. government securities23   23 
Other (4)12   12 
Mutual funds (5) (6)87 6 (3)90 
Total$1,623 $6 $(6)$1,623 
___________________ 
(1)Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets. These investments are classified as debt securities.
(2)Primarily consists of U.S. government securities and mortgage-backed securities.
(3)Primarily consists of supranational bonds, mortgage-backed securities, agency bonds, and certificates of deposit .
(4)Consists of agency bonds, agency collateralized mortgage obligations, and mortgage-backed securities.
(5)See Note 11, “Deferred Compensation” for more information.
(6)Included in “Prepaid expenses and other current assets” or “Long-term other assets” in the accompanying Condensed Consolidated Balance Sheets.
11



January 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Cash equivalents (1):
Money market funds$737 $— $— $737 
Commercial paper169 — — 169 
Certificates of deposit35 — — 35 
U.S government securities13 — — 13 
Other (2)12 — — 12 
Marketable securities:
Short-term
Corporate debt securities44 — — 44 
Commercial paper42 — — 42 
Asset-backed securities 19 — — 19 
U.S. government securities 17 — — 17 
Other (3)3 — — 3 
Long-term
Corporate debt securities45   45 
U.S. government securities35   35 
Asset backed securities13   13 
Other (4)9   9 
Mutual funds (5) (6)81 6 (1)86 
Convertible debt securities (6)3 1 (2)2 
Strategic investments derivative asset (6)2  (2) 
Total$1,279 $7 $(5)$1,281 
____________________ 
(1)Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets. These investments are classified as debt securities.
(2)Consists of custody cash deposits, agency discount notes, municipal bonds, corporate debt securities, asset-backed securities, and mortgage-backed securities.
(3)Consists of mortgage-backed securities, agency mortgage-backed securities, common stock, and agency collateralized mortgage obligations.
(4)Consists of agency mortgage-backed securities, agency bonds, agency collateralized mortgage obligations, mortgage-backed securities, and collateralized mortgage obligations.
(5)See Note 11, “Deferred Compensation” for more information.
(6)Included in “Prepaid expenses and other current assets,” or “Long-term other assets,” in the accompanying Condensed Consolidated Balance Sheets.

The following table summarizes the fair values of investments classified as marketable debt securities by contractual maturity date as of October 31, 2023:
Fair Value
Due within 1 year$401 
Due in 1 year through 5 years203 
Due in 5 years through 10 years15 
Due after 10 years28 
Total
$647 
    
As of both October 31, 2023, and January 31, 2023, Autodesk had no material unrealized losses, individually and in the aggregate, for marketable debt securities that are in a continuous unrealized loss position for greater than 12 months. Total
12


unrealized gains for securities with net gains in accumulated other comprehensive income were not material for the nine months ended October 31, 2023.

Autodesk monitors all marketable debt securities for potential credit losses by reviewing indicators such as, but not limited to, current credit rating, change in credit rating, credit outlook, and default risk. There were no allowances for credit losses as of both October 31, 2023, and January 31, 2023. There were no write offs of accrued interest receivables for both the nine months ended October 31, 2023 and 2022.

There were no material realized gain or loss for the sales or redemptions of marketable debt securities during both the nine months ended October 31, 2023 and 2022. Realized gains and losses from the sales or redemptions of marketable debt securities are recorded in “Interest and other expense, net” on the Company's Condensed Consolidated Statements of Operations.

Proceeds from the sale and maturity of marketable debt securities were as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
Marketable debt securities$190 $57 $529 $302 

Strategic investments in equity securities

As of October 31, 2023, and January 31, 2023, Autodesk had $167 million and $177 million, respectively, in direct investments in privately held companies. These strategic investments in equity securities 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. If Autodesk determines that an impairment has occurred, Autodesk writes down the investment to its fair value. These strategic investments in equity securities are generally subject to a security-specific restriction which limits the sale or transfer of the respective equity security during the holding period.

Adjustments to the carrying value of our strategic investment equity securities with no readily determined fair values measured using the measurement alternative are included in “Interest and other expense, net” on the Company's Condensed Consolidated Statements of Operations. These adjustments were as follows:
 Nine Months Ended October 31,Cumulative Amount as of
20232022October 31, 2023
Upward adjustments$ $6 $29 
Negative adjustments, including impairments (21)(5)(107)
Net unrealized adjustments$(21)$1 $(78)

Realized gains for the disposition of strategic investment equity securities for both the three and nine months ended October 31, 2023 and 2022 were immaterial.

Fair Value

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.

13


The following tables summarize the Company's financial instruments measured at fair value on a recurring basis by significant investment category as of October 31, 2023, and January 31, 2023:  
October 31, 2023
Level 1Level 2Level 3Total
Assets:
Cash equivalents (1):
Money market funds$546 $ $ $546 
Commercial paper  257  257 
Certificates of deposit 69  69 
Other (2) 14  14 
Marketable securities:
Short-term
Commercial paper 207  207 
U.S. government securities 90  90 
Corporate debt securities 71  71 
Asset-backed securities 32  32 
Agency discount notes 11  11 
Other (3) 17  17 
Long-term
Corporate debt securities 96  96 
Asset-backed securities 54  54 
Agency mortgage backed securities 34  34 
U.S. government securities 23  23 
Other (4) 12  12 
Long-term other assets:
Mutual funds (5)(6)90   90 
Derivative assets:
Derivative contract assets (6) 27  27 
Derivative liabilities:
Derivative contract liabilities (7) (18) (18)
Total$636 $996 $ $1,632 
____________________ 
(1)Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets. These investments are classified as debt securities.
(2)Primarily consists of U.S. government securities and mortgage-backed securities.
(3)Primarily consists of supranational bonds, mortgage-backed securities, agency bonds, and certificates of deposit .
(4)Consists of agency bonds, agency collateralized mortgage obligations, and mortgage-backed securities.
(5)See Note 11, “Deferred Compensation” for more information.
(6)Included in “Prepaid expenses and other current assets” or “Long-term other assets” in the accompanying Condensed Consolidated Balance Sheets.
(7)Included in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.


14


January 31, 2023
Level 1Level 2Level 3Total
Assets:
Cash equivalents (1):
Money market funds$737 $ $ $737 
Commercial paper 169  169 
Certificates of deposit 35  35 
U.S government securities 13  13 
Other (2)4 8  12 
Marketable securities:
Short-term
Corporate debt securities 44  44 
Commercial paper 42  42 
Asset backed securities  19  19 
U.S. government securities  17  17 
Other (3) 3  3 
Long-term
Corporate debt securities 45  45 
U.S. government securities 35  35 
Asset backed securities 13  13 
Other (4) 9  9 
Long-term other assets:
Mutual funds (5) (6)86   86 
Convertible debt securities (6)  2 2 
Derivative assets:
Derivative contract assets (6) 14  14 
Derivative liabilities:
Derivative contract liabilities (7) (31) (31)
Total$827 $435 $2 $1,264 
____________________ 
(1)Included in “Cash and cash equivalents” in the accompanying Condensed Consolidated Balance Sheets. These investments are classified as debt securities.
(2)Consists of custody cash deposits, agency discount notes, municipal bonds, corporate debt securities, asset-backed securities, and mortgage-backed securities.
(3)Consists of mortgage-backed securities, agency mortgage-backed securities, common stock, and agency collateralized mortgage obligations.
(4)Consists of agency mortgage-backed securities, agency bonds, agency collateralized mortgage obligations, mortgage-backed securities, and collateralized mortgage obligations.
(5)See Note 11, “Deferred Compensation” for more information.
(6)Included in “Prepaid expenses and other current assets,” or “Long-term other assets,” in the accompanying Condensed Consolidated Balance Sheets.
(7)Included in “Other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets.





15


6. Equity Compensation

Restricted Stock Units

A summary of restricted stock activity for the nine months ended October 31, 2023, is as follows:
Unvested
restricted
stock units
Weighted
average grant
date fair value
per share
 (in thousands) 
Unvested restricted stock units at January 31, 20234,848 $216.20 
Granted3,544 199.54 
Vested(2,334)216.56 
Canceled/Forfeited(261)212.95 
        Performance Adjustment (1)(11)189.41 
Unvested restricted stock units at October 31, 2023
5,786 $205.98 
_______________
(1)Based on Autodesk's financial results and relative total stockholder return for the fiscal 2023 performance period. The performance stock units were attained at rates ranging from 86% to 110% of the target award.

The fair value of the shares vested during the nine months ended October 31, 2023 and 2022, was $476 million and $402 million, respectively.

During the nine months ended October 31, 2023, Autodesk granted 3,233 thousand restricted stock units. Restricted 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 recorded stock-based compensation expense related to restricted stock units of $151 million and $130 million during the three months ended October 31, 2023 and 2022, respectively. Autodesk recorded stock-based compensation expense related to restricted stock units of $445 million and $383 million during the nine months ended October 31, 2023 and 2022, respectively.

During the nine months ended October 31, 2023 and 2022, Autodesk settled liability-classified awards in the amount of $9 million and $8 million, respectively. The ultimate number of shares earned was based on the Autodesk closing stock price on the vesting date. As these awards were settled in a fixed dollar amount of shares, the awards were accounted for as a liability-classified award and were expensed using the straight-line method over the vesting period.

During the nine months ended October 31, 2023, Autodesk granted 311 thousand 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 primarily based on revenue and free cash flow goals adopted by the Compensation and Human Resource Committee and 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”). The fair value of the performance stock units is expensed using the accelerated attribution method over the three-year vesting 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 2024 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).

The performance criteria for the performance stock units vested during the nine months ended October 31, 2023, was based on revenue and free cash flow goals adopted by the Compensation and Human Resource Committee.

16


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 recorded stock-based compensation expense related to performance stock units of $11 million and $13 million for the three months ended October 31, 2023 and 2022, respectively. Autodesk recorded stock-based compensation expense related to performance stock units of $32 million and $42 million during the nine months ended October 31, 2023 and 2022, respectively.

Common Stock

Autodesk agreed to issue a fixed amount of $13 million in shares of common stock to certain employees in connection with a fiscal 2022 acquisition. Issuance of the common stock was dependent on the respective employees’ continued employment through the vesting period. During the nine months ended October 31, 2023, Autodesk issued the remaining 39 thousand shares at an aggregate fair value of $8 million. The awards were accounted for as liability-classified awards and were recognized as compensation expense using the straight-line method over the vesting period.

Autodesk agreed to issue a fixed amount of $11 million in common stock at a future date to certain employees in connection with other fiscal 2022 acquisitions. Issuance of the common stock is dependent on the respective employees’ continued employment through the vesting period. The number of shares to be issued will be determined based on the volume weighted average closing price (“VWAP”) of Autodesk’s common stock at the issuance date. As of October 31, 2023, remaining shares to be issued are estimated to be 33 thousand. The awards are accounted for as liability-classified awards and are recognized as compensation expense using the straight-line method over the vesting period.

Autodesk issued 40 thousand shares of restricted common stock to certain employees in connection with a fiscal 2023 acquisition. These shares of restricted common stock were recorded as “Prepaid expenses and other current assets” and “Long-term other assets” on our Condensed Consolidated Balance Sheets and will be amortized to stock-based compensation expense for post-acquisition services using the straight-line method over the two-year vesting period. Additionally, Autodesk agreed to issue a fixed amount of $5 million in common stock at a future date to certain employees in connection with a fiscal 2023 acquisition. Issuance of the common stock is dependent on the respective employees’ continued employment through the vesting period. The number of shares to be issued will be determined based on the VWAP of Autodesk’s common stock at the issuance date. During the nine months ended October 31, 2023, Autodesk issued 9 thousand shares at an aggregate fair value of $1 million. Remaining shares to be issued are estimated to be 13 thousand as of October 31, 2023. The awards are accounted for as liability-classified awards and are recognized as compensation expense using the straight-line method over the vesting period.

Autodesk recorded stock-based compensation expense related to common stock shares of $5 million and $10 million for the three months ended October 31, 2023 and 2022, respectively. Autodesk recorded stock-based compensation expense related to common stock shares of $15 million and $27 million for the nine months ended October 31, 2023 and 2022, 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 three and nine months October 31, 2023 and 2022, is as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
Issued shares (in thousands)357 363 791 740 
Average price of issued shares$164.30 $158.78 $163.91 $166.44 
Weighted average grant date fair value of shares granted under the ESPP (1)$67.29 $66.43 $68.70 $67.77 
 _______________
(1)Calculated as of the award grant date using the Black-Scholes Merton (“BSM”) option pricing model.

17


Stock-based Compensation Expense

The following table summarizes stock-based compensation expense for the three and nine months ended October 31, 2023 and 2022, as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2023202220232022
Cost of subscription and maintenance revenue$9 $9 $28 $26 
Cost of other revenue4 3 11 9 
Marketing and sales66 68 202 199 
Research and development78 71 233 199 
General and administrative24 21 69 63 
Stock-based compensation expense related to stock awards and ESPP purchases
181 172 543 496 
Tax (benefit) expense(2)(2)1 7 
Stock-based compensation expense related to stock awards and ESPP purchases, net of tax
$179 $170 $544 $503 
 
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 the 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:
Three Months Ended October 31, 2023Three Months Ended October 31, 2022
Performance Stock Units ESPP Performance Stock Units ESPP
Range of expected volatility
N/A
29.4 - 37.4%
N/A
40.7 - 44.9%
Range of expected lives (in years)N/A
0.5- 2.0
N/A
0.5 - 2.0
Expected dividendsN/A%N/A%
Range of risk-free interest ratesN/A
5.0 -5.5%
N/A
3.7 - 3.9%
 Nine Months Ended October 31, 2023Nine Months Ended October 31, 2022
 Performance Stock UnitsESPPPerformance Stock UnitsESPP
Range of expected volatilities
40.9 - 42.5%
29.4 - 42.4%
39.4 - 40.7%
38.3 - 44.9%
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
4.3 - 4.7%
4.3 - 5.5%
1.2 - 1.6%
0.9 - 3.9%

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 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 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.

18


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 $79 million, relative to pre-tax income of $320 million for the three months ended October 31, 2023, and income tax expense of $44 million, relative to pre-tax income of $242 million for the three months ended October 31, 2022. Income tax expense for the three months ended October 31, 2023, reflects an increased withholding tax expense and non-recurring integration tax expense, offset by a decrease in tax expense as a result of jurisdictional mix of year-to-date earnings, resulting in a net tax expense increase year over year.

Autodesk had income tax expense of $175 million, relative to pre-tax income of $799 million for the nine months ended October 31, 2023, and income tax expense of $139 million, relative to pre-tax income of $669 million for the nine months ended October 31, 2022. Income tax expense for the nine months ended October 31, 2023, reflects a reduced U.S. foreign derived intangible income tax benefit, increased withholding tax expense and non-recurring integration tax expense, offset by an income tax benefit arising from temporary relief provided by the Internal Revenue Service relating to U.S. foreign tax credit regulations and reduced tax expense relating to stock-based compensation.

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. We have maintained a valuation allowance on all or part of our Australia, New Zealand, California, Michigan deferred tax assets, as well as our U.S. capital loss deferred tax assets as it is more likely than not that these deferred tax assets will not be realized.

As of October 31, 2023, the Company had $234 million of gross unrecognized tax benefits, of which $195 million would impact the effective tax rate, if recognized. The remaining $39 million would reduce our valuation allowance, if recognized. Approximately $2 million of unrecognized tax benefits will decrease in the next twelve months for statute lapses.

Signed into law on August 16, 2022, the Inflation Reduction Act contains many revisions to the Internal Revenue Code effective in taxable years beginning after December 31, 2022, including a 15% corporate alternative minimum tax. Autodesk continues to monitor the impact of the Inflation Reduction Act on its consolidated financial statements.

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8. Intangible Assets, Net

The following tables summarize the Company's intangible assets, net, as of October 31, 2023, and January 31, 2023:
October 31, 2023
Gross Carrying Amount (1)Accumulated AmortizationNet
Customer relationships$663 $(426)$237 
Developed technologies920 (750)170 
Trade names and patents115 (111)4 
Other1 (1) 
Total intangible assets$1,699 $(1,288)$411 
 _______________ 
(1)Includes the effects of foreign currency translation.

January 31, 2023
Gross Carrying Amount (1)Accumulated AmortizationNet
Customer relationships$659 $(402)$257 
Developed technologies858 (718)140 
Trade names and patents116 (106)10 
Total intangible assets$1,633 $(1,226)$407 
 _______________ 
(1)Includes the effects of foreign currency translation.


9. Cloud Computing Arrangements

Autodesk enters into certain cloud-based software hosting arrangements that are accounted for as service contracts. Costs incurred for these arrangements are capitalized for application development activities, if material, and immediately expensed for preliminary project activities and post-implementation activities. Autodesk amortizes the capitalized development costs straight-line over the fixed, non-cancellable term of the associated hosting arrangement plus any reasonably certain renewal periods. The capitalized costs are included in “Prepaid expenses and other current assets” and “Long-term other assets” on our Condensed Consolidated Balance Sheets. Capitalized costs were $238 million and $190 million at October 31, 2023, and January 31, 2023, respectively. Accumulated amortization was $69 million and $41 million at October 31, 2023, and January 31, 2023, respectively. Amortization expense for the three months ended October 31, 2023 and 2022, was $10 million and $7 million, respectively. Amortization expense for the nine months ended October 31, 2023 and 2022 was $28 million and $16 million, respectively.

10. 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 nine months ended October 31, 2023, (in millions):
 
Balance as of January 31, 2023$3,774 
Less: accumulated impairment losses as of January 31, 2023(149)
Net balance as of January 31, 20233,625 
Additions arising from acquisitions during the period8 
Effect of foreign currency translation(29)
Balance as of October 31, 2023$3,604 
 
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11. Deferred Compensation

At October 31, 2023, Autodesk had investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans and a corresponding deferred compensation liability totaling $90 million. Of this amount, $7 million was classified as current and $83 million was classified as non-current in the Condensed Consolidated Balance Sheets. Of the $86 million related to the investments in a rabbi trust as of January 31, 2023, $7 million was classified as current and $79 million was classified as non-current. The current and non-current asset portions of the investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans are recorded in the Condensed Consolidated Balance Sheets under “Prepaid expenses and other current assets” and “Long-term other assets,” respectively. The current and non-current portions of the liability are recorded in the Condensed Consolidated Balance Sheets under “Accrued compensation” and “Long-term other liabilities,” respectively.

Costs to obtain a contract with a customer

Sales commissions earned by our internal sales personnel and our channel partners are considered incremental and recoverable costs of obtaining a contract with a customer. The ending balance of assets recognized from costs to obtain a contract with a customer was $151 million as of October 31, 2023, and $133 million as of January 31, 2023. These assets are recorded in “Prepaid expenses and other current assets” and “Long-term other assets” in the Condensed Consolidated Balance Sheets. Amortization expense related to assets recognized from costs to obtain a contract with a customer was $34 million and $97 million during the three and nine months ended October 31, 2023, respectively. Amortization expense related to assets recognized from costs to obtain a contract with a customer was $35 million and $102 million during the three and nine months ended October 31, 2022, respectively. Autodesk did not recognize any contract cost impairment losses during the three and nine months ended October 31, 2023 and 2022.

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

Computer equipment, software, furniture and equipment, and leasehold improvements, and the related accumulated depreciation were as follows: 
October 31, 2023January 31, 2023
Computer hardware, at cost$115 $126 
Computer software, at cost48