The software subscription model is taking a beating after the maker of computer-aided design (CAD) software, Autodesk cut its full-year profit and revenue forecast for the second time this year, sending its shares down seven percent.
Autodesk also reported lower than expected quarterly revenue as its licensing revenue declined because of the company’s shift to a cloud based subscription model.
The company said it expects revenue of $2.47 billion-$2.50 billion for the year. In May, the company forecast 2016 revenue growth of two to four percent, compared with fiscal 2015, implying revenue of $2.56 billion to $2.61 billion.
Analysts on average were expecting revenue of $2.59 billion.
Chief Executive Carl Bass said during a conference call said that the company had updated its revenue outlook based on a greater than expected portion of its sales shifting from perpetual licences to new subscription types.
Subscriptions bring in less money upfront as payment is spread over the entire period of use unlike traditional packaged software, but typically ensure more predictable recurring revenue.
However, the company maintained its full-year forecast for billing growth and net subscription additions.
The company’s licensing and subscription revenue, which accounts for nearly half of its total revenue, fell 17 percent in the second quarter ending July 31, from a year earlier.
The company reported a net loss of $235.5 million, or $1.04 per share, for the second quarter, compared with a profit of $31.3 million, or 13 cents per share, a year earlier.
Revenues fell 4.3 percent to $609.5 million, missing the average analyst estimate of $612.4 million.