CORRESP 1 filename1.htm

February 6, 2019

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

Office of Information Technology and Services

100 F Street, N.E.

Washington, D.C. 20549

Attention: |  | Megan Akst, Senior Staff Accountant
|  | Christine Dietz, Assistant Chief Accountant

| Re: | Autodesk, Inc.

Form 10-K for the Fiscal Year Ended January 31, 2018

Filed March 22, 2018

Form 10-Q for the Quarterly Period Ended April 30, 2018

Filed June 8, 2018

File No. 000-14338

Ladies and Gentlemen:

Autodesk, Inc. (“Autodesk, the “Company” or “we”) submits this letter in response to comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) received by letter dated December 20, 2018, relating to the Company’s Form 10-K for the fiscal year ended January 31, 2018 (File No. 000-14338) originally filed with the Commission on March 22, 2018 (the “Form 10-K”) and the Company’s Form 10-Q for the fiscal quarter ended April 30, 2018 (File No. 000-14338) originally filed with the Commission on June 8, 2018 (the “Form 10-Q”).

In this letter, the comments from the Staff have been recited in italicized, bold type, and each comment is followed by the Company’s response.

Form 10-Q for the Quarterly Period Ended April 30, 2018

Note 3. Revenue Recognition, page 10

| 1. | We note your response to prior comment 1. With a specific focus on your AutoCAD and AutoCAD LT product subscriptions (collectively “AutoCAD”), please tell us how you concluded that the promise to transfer the AutoCAD desktop application is not separately identifiable from the promise to transfer AutoCAD cloud services in accordance with ASC 606-10-25-21. Within your response please discuss, at a minimum:

| • |  | The specific functionalities that reside within the cloud services of AutoCAD and are incremental to the AutoCAD desktop application, with a focus on the specific functionalities that were significant to the Company’s conclusion that the AutoCAD desktop application is not distinct from the AutoCAD cloud services. Additionally, please describe the extent to which these specific AutoCAD cloud service functionalities are incremental to similar functionalities, if any, in the AutoCAD desktop application.

| • |  | How the specific AutoCAD cloud service functionalities interact with and/or are integrated with the AutoCAD desktop application.

| • |  | How you determined that the nature of the promise, in the context of the contract, is to transfer the combined item to which the AutoCAD desktop application and the AutoCAD cloud services are inputs (for example, how each of the AutoCAD desktop application and the AutoCAD cloud services significantly affects the other’s

| utility to the customer and therefore the customer’s ability to derive its intended benefit from the contract depends on the Company transferring both the AutoCAD desktop application and the AutoCAD cloud services). Consider whether one or more examples would be helpful to illustrate this point.

We respectfully advise the Staff that our AutoCAD and AutoCAD LT product subscriptions (collectively “AutoCAD Family”) represent an integrated offering of desktop software and cloud functionality that provide a device-independent, collaborative design workflow for designers and their stakeholders. AutoCAD is a computer-aided design (“CAD”) product that architects, engineers, and construction professionals rely on to create precise 2D and 3D drawings. AutoCAD LT offers many of the same capabilities, but is limited to 2D design. Our AutoCAD Family subscriptions provide our customers with the ability to create designs on multiple computing platforms, sync design data effortlessly between devices, collaborate with distributed team members, and share design intent with stakeholders from initial concept to finished project. As summarized in our previous response, the collaborative design workflow for AutoCAD Family products, the core value proposition to our customers, is created through the ongoing interaction between our desktop applications and cloud services which provides the following unique incremental functionalities:

| • |  | Intelligent Cloud Data Management – Autodesk’s cloud functionality enables users to work with and transfer complex designs between teams without risk of losing critical data. Design is an iterative and increasingly distributed process, and the ability to reliably manage data across multiple stakeholders and versions is only possible with the cloud.

| • |  | Mobility – The cloud also extends the reach of customers beyond their desktops to a wide variety of mobile devices. Our customers are increasingly utilizing Autodesk’s technology across multiple platforms (including desktop computers, tablets and smartphones, or through web browsers), and the cloud is critical in synchronizing settings and data across them.

| • |  | Cloud Collaboration – Autodesk’s cloud capabilities provide access to designs that are worked on across teams of users in one workspace. The cloud also allows designers to share design intent with stakeholders leveraging the full, interactive 3D model (as opposed to limited flat images), regardless of whether they have access to Autodesk products themselves.

| • |  | Rendering – Nearly unlimited computational power can be harnessed by running CPU-intensive rendering tasks in the cloud.

Intelligent Cloud Data Management

The foundation for these capabilities rests in the nature of AutoCAD design data. A design developed in AutoCAD is usually not a single file, but commonly draws data from multiple externally referenced (commonly referred to as “x-ref”) files. Those x-refed files may be located in multiple repositories and in a variety of formats, both native AutoCAD (DWG) and third-party. However, they all contribute important drafting and engineering data to the overall design.

For example, an architect may initiate a building design in an AutoCAD Family product. That design may incorporate distinct x-refed files for each floor of the building, the electrical systems, the air systems, or the plumbing. Those latter systems may be developed by other specialist engineers. The architect may choose windows from a particular vendor, and directly link the CAD data from the window vendor’s product file. If the window vendor uses a third-party CAD format, the architect can translate it to DWG by leveraging Autodesk’s always up-to-date cloud-based translators. More complex designs will incorporate significantly more x-refed files, exponentially increasing the data links that must be maintained for the complete design. A break in any of those links can lead to missing data, errors, inefficiencies and unnecessary costs for the design project.

For a single user who works alone (without collaborators or stakeholders) on a single desktop device and maintains all of his or her data locally on their hard drive, managing x-ref data may not be difficult. However, such users are an increasingly small portion of AutoCAD Family subscribers. Design is an iterative and increasingly distributed process (with team members separated by organization, company, or geography), and users are increasingly utilizing Autodesk’s technology across multiple devices, both desktop and mobile. These broad technological trends substantially complicate the management of x-ref designs; as soon as a user attempts to move a design between devices (say, from desktop to mobile) or share with another team member, they must account for all the linked files or risk the loss of crucial design or engineering data. Referring to our example above, the architect may transfer his or her design to another user without accounting for a link to the window vendor CAD file. In that instance, the recipient would open the design to find that the building has no windows. While this error may be easily noticed, other missing data may not be as evident and lead to subsequent errors and costly rework.

Autodesk’s cloud storage (formerly “A360 Drive”, now “Autodesk Drive”) provides all Autodesk subscribers (including AutoCAD Family subscribers) with an intelligent cloud data management solution that sees the design holistically. When a user creates or edits a design in his or her Autodesk Drive account, our cloud functionality tracks any added or updated x-refs, regardless of their location (on the user’s local computer, their Autodesk Drive account, or another subscriber’s account which has been shared with them). For example, if someone using third-party storage simply relocates x-refed files to different folders, they will break the links to their design and lose important data. In contrast, Autodesk Drive will maintain links even if the x-refed files are moved to other directories. Autodesk’s cloud functionality manages the entire design, regardless of the number of x-refed files, at all times and in a manner which is effortless for the user. The following publicly-available promotion video demonstrates this core cloud functionality:

https://www.youtube.com/watch?v=MbyWLHWd0_0

Mobility

This cloud-based technological foundation enables numerous mobility and collaboration capabilities for our AutoCAD Family products which are directly integrated with the desktop and mobile software applications and will grow increasingly more so over time. One such capability is device independence. AutoCAD Family subscribers have access to the AutoCAD Mobile app, which provides viewing and editing functions on iOS and Android devices. They also have access to AutoCAD Web, which can be accessed on any device through a web browser. The seamless transfer of a design, including all x-ref data, from the AutoCAD Family desktop products is initiated through the “save to web and mobile” buttons directly integrated within those applications. A dialogue menu enables users to select the entire design or specific portions for transfer. Our cloud-based intelligent cloud data management functionality draws the relevant data from across the x-refed files and packages it in the user’s Autodesk Drive account, where it can then be accessed remotely via the AutoCAD Mobile or Web applications. Edits made by the user on remote devices may then be saved back to the user’s desktop system, including all changes to impacted x-refed files. The following publicly-available promotion video demonstrates this functionality:

https://www.youtube.com/watch?v=nHFcgUDNjA4

Collaboration

When an AutoCAD Family subscriber needs to collaborate with other designers, he or she may invite those other users to access a particular Autodesk Drive account. Those collaborators may then edit the design directly, and Autodesk’s intelligent cloud data management will automatically update all x-refed data and visualizations that were saved by the AutoCAD Family desktop software. Autodesk Drive also provides the user with access control and version management capabilities for designs shared with other team members.

Collaborating on anything but the simplest designs becomes extraordinarily difficult with third-party cloud storage offerings. A user must manually identify all the relevant linked files for the design and save them in the third-party

storage account. As more x-ref files are incorporated into a design, the difficulty of managing edits through third-party storage increases exponentially. For example, if someone shares their design folder in a third-party cloud storage offering, but fails to identify and provide access to every other folder which contains files x-refed in the design, the x-ref links will be broken and the collaborator will have missing data. The design workflow becomes highly inefficient, with a significant risk of critical data loss.

Autodesk’s cloud functionality also enables AutoCAD Family subscribers to collaborate with Shared Views. Users may leverage this capability to get feedback on a design while restricting access to the actual files, or from team members and stakeholders who don’t have access to the AutoCAD Family desktop software themselves. The Shared Views function is directly integrated into the AutoCAD Family desktop software, and accessed through the application menu or collaboration tab. The application dialogue allows users great control over the data which is shared, including specific layers, objects and engineering metadata. The Shared View is generated by Autodesk’s cloud functionality and a web link is provided through the desktop software and can then be sent to others. Those who are provided with the link can access the cloud-based model view in a web browser, and interact with it in a number of ways:

| • |  | Layers can be turned on or off, and individual objects can be isolated, allowing the viewer to focus on points of interest.

| • |  | 3D designs may be rotated and viewed from any angle. The Shared View is not a flat image, but a complete 3D model.

| • |  | Engineering metadata can be examined. For example, the viewer may highlight a wall in a building design and get precise measurements of length, height or thickness.

| • |  | Viewers may mark-up and draft comments, and save these to the Shared View file. The designer is then notified of the feedback, and can download it from his or her Autodesk Drive account. The user can then respond to the feedback with comments or edits directly within the desktop software.

The following publicly-available promotion video demonstrates this functionality:

https://www.youtube.com/watch?v=GEwN9J4NnrE

Without the AutoCAD Family software and our cloud functionality working together, such collaboration is not possible. If a designer lacking our cloud functionality needed feedback from another AutoCAD Family user, he or she would have to send the full set of design files. This leads to the same complexities in transferring x-refed designs outlined above. To get feedback from a non-user, the designer would be limited to sending flat images (for example, JPEG or PDF) of the design that lack rich engineering metadata and ability to interact with the design as described above. Shared Views represents an integration of our desktop software and cloud-based data management that provides unique capabilities to our subscribers, significantly increasing the utility of the design workflow.

Rendering

While AutoCAD LT focuses on 2D designs, AutoCAD’s 3D functionality enables users to leverage Autodesk’s powerful cloud-based rendering functionality. Autodesk’s cloud services translate AutoCAD designs into photorealistic and high-resolution images in less time. The virtually infinite computing capacity of the cloud allows customers to run computationally intense rendering tasks without slowing down his or her desktop or the need for expensive hardware. An AutoCAD user simply selects the “render in the cloud” button in the desktop application, which automatically loads his or her 3D design to Autodesk’s cloud rendering engine. Users can simultaneously test the performance of multiple design options at low resolution to identify the best visualization parameters (including camera angle, framing, lighting, etc.). Once the best options are identified, the user can quickly run a high-resolution

image that he or she may present to project stakeholders to clearly express design intent. Although high-resolution renders are metered (consuming a number of “cloud credits” which are bundled with AutoCAD Family subscriptions), users may run an unlimited number of lower-resolution renders which allows them to rapidly increase the number of visualization options they can consider as an integrated part of their workflow. Without this cloud capability, users would be unable to simultaneously perform design work while these processes run or would require distinct dedicated hardware.

The following publicly-available promotion video demonstrates this functionality:

https://www.youtube.com/watch?v=UrRXXM5gHDg

The following tables summarizes the key capabilities of the AutoCAD Family products described above, and the extent to which Autodesk’s cloud services provide significant incremental functionality:

AutoCAD

Source of functionality |  | Create and edit x-ref designs |  | Intelligent cloud data management |  | Mobility |  | Cloud Collaboration |  | Rendering
Desktop software |  | X |  |  |  |  |  |  |  | X
Cloud |  | X |  | X |  | X |  | X |  | X
Extent to which cloud functionality above is incremental to similar functionalities, if any, in the desktop software |  | Users may create and edit designs entirely in a browser via AutoCAD Web, without the need to install desktop software |  | Fully incremental – provided only through Autodesk’s cloud functionality |  | Fully incremental – provided only through Autodesk’s cloud functionality |  | Fully incremental – provided only through Autodesk’s cloud functionality |  | Significant incremental functionality – while rendering may be performed on a user’s desktop, it diminishes the user’s ability to continue working on their computer

AutoCAD LT

Source of functionality |  | Create and edit x-ref designs |  | Intelligent cloud data management |  | Mobility |  | Cloud Collaboration
Desktop software |  | X |  |  |  |  |  |
Cloud |  | X |  | X |  | X |  | X
Extent to which cloud functionality above is incremental to similar functionalities, if any, in the desktop software |  | Users may create and edit designs entirely in a browser via AutoCAD Web, without the need to install desktop software |  | Fully incremental – provided only through Autodesk’s cloud functionality |  | Fully incremental – provided only through Autodesk’s cloud functionality |  | Fully incremental – provided only through Autodesk’s cloud functionality

Nature of the Promise to the Customer

As described in detail above, each of these capabilities is achieved by interaction of the AutoCAD Family desktop software and our cloud functionality. The functions are initiated within the desktop software, either as foundational x-ref design data structure or through application commands and dialogues. Those software actions directly trigger the cloud functionality to draw the relevant data, transfer it, share it or render it. As the cloud-based data is interacted with (by the user on other devices, or by other collaborators), the changes and feedback are seamlessly returned to the user’s desktop software.

While we concluded that the desktop software in our AutoCAD Family subscriptions is capable of being distinct within the guidelines of ASC 606-10-25-19 as a user can perform certain stand-alone design functions solely on their desktop computer, we concluded the desktop software and cloud services are not distinct within the context of the contract as they are highly integrated, interdependent, and interrelated in a manner consistent with ASC 606-10-25-21(c).

As noted in our initial comment letter response, we considered the Basis for Conclusions paragraphs in ASU 2016-10 to understand the Financial Accounting Standards Boards’ intent in ASC 606-10-25-21:

BC29 of ASU 2016-10:

“…The inputs to a combined item (or items) concept might be further explained, in many cases, as those in which an entity’s promise to transfer the promised goods or services results in a combined item (or items) that is greater than (or substantively different from) the sum of those promised (component) goods and services.”

BC32 of ASU 2016-10:

“…Therefore, the entity should evaluate whether two or more promised goods or services (for example, a delivered item and an undelivered item) each significantly affect the other (and, therefore, are highly interrelated or highly interdependent) in the contract. The entity should not merely evaluate whether one item, by its nature, depends on the other (for example, an undelivered item that would never be obtained by a customer absent the presence of the delivered item in the contract or the customer having obtained that item in a different contract).”

BC33(b) of ASU 2016-10:

“…Therefore, utility also is relevant in evaluating whether two or more promises in a contract are separately identifiable because even if two or more goods or services are capable of being distinct because the customer can derive some measure of economic benefit from each one, the customer’s ability to derive its intended benefit from the contract may depend on the entity transferring each of those goods or services.”

We also considered AICPA Software Revenue Recognition Issue #14-1: Determining Whether Software Intellectual Property is Distinct in Cloud Computing Arrangements (i.e., Hosting, Software-as-a-Service and Hybrid Software/SAAS), specifically paragraph 16(b):

“A portion of the hosted functionality is available from other vendors, but the entity provides significant additional utility from the manner in which it integrates the software with its own hosted functionality. For example, the online storage and sharing is integrated with the on-premise software in such a manner that the customer gains capabilities or workflow efficiencies that would not be available when using another vendor’s hosted services. In such circumstances the on-premise software is capable of being distinct, but the customer obtains a significant functional benefit by purchasing the complete hybrid offering from the entity. This may indicate that the software license and hosting service are interrelated to each other, and are not distinct within the context of the contract.”

In Example 10, Case C of ASC 606, software and updates “are not separately identifiable because the license and the updates are, in effect, inputs to a combined item (anti-virus protection) in the contract. Consequently, the license and updates fulfill a single promise to the customer in the contract (a promise to provide protection from computer viruses.)” Similarly, the capabilities enabled by the two-way interaction of our AutoCAD Family desktop software and cloud functionality are part of the core promise to our subscription customers. Autodesk specifically and actively markets this functionality as a key user benefit for our subscriptions. The links above represent publicly-available marketing videos promoting these features, which clearly explain the interaction between the software and cloud to deliver them. Autodesk’s marketing of these benefits extends through multiple channels, including the following:

| • |  | Autodesk’s public website for the AutoCAD Family products, as well as specifically for AutoCAD Mobile, AutoCAD Web, Autodesk Drive, and Autodesk cloud rendering.

| • |  | Print advertising and direct marketing materials, as well as collateral and training provided to Autodesk’s resellers for their promotion of our subscriptions.

| • |  | Social media communications, including Autodesk’s official Twitter, Facebook and Instagram feeds, as well as our public web blogs.

| • |  | Presentations and classes at our worldwide Autodesk University user conferences, many of which are recorded and made available on our website for public viewing.

We have included extensive examples of our promotional material for the cloud-enabled capabilities of our AutoCAD Family subscriptions in an exhibit to this response.

The nature of promises made to our customers in these materials is to provide a technology solution that allows our customer to collaborate on design projects more effectively and efficiently by being able to view, share, and review design projects seamlessly. Without the ongoing cloud functionality, the features described above would simply not work and we would fail to deliver on that promise to our subscribers. While users can derive benefits from the desktop software alone, their ability to derive the intended benefit from the contract—in the form of, among other things, creation of designs on multiple platforms, data syncing, collaboration, and sharing of design intent—depends on Autodesk transferring both the software and cloud services to the user and the risks are therefore not separable. This is consistent with the Basis for Conclusions paragraph 106 which acknowledges that the “notion of ‘separately identifiable’ [in ASC 606-10-25-21] is based on the notion of separable risks in paragraph BC103 (that is, whether the risk that an entity assumes to fulfill its obligation to transfer one of those promised goods or services to the customer is a risk that is inseparable from the risk relating to the transfer of the other promised goods or services).”

Furthermore, the customer would suffer a significant diminution in utility if the cloud functionality is not provided, in a manner consistent with the concepts of the Basis for Conclusions and AICPA Software Revenue Recognition Issue #14-1. This diminution of utility would stem from not having the ability to do certain activities (e.g., data management, collaboration features, device independence), even if they employed significant manual “work arounds”, or from efficiency loss due to increased CPU consumption on their desktops for rendering tasks.

After considering the functional nature of our product subscriptions, as well as the customer’s expectations, we have concluded that the desktop applications and cloud functionality are not distinct in the context of the contract and should be accounted for as a single performance obligation. The value to the customer in our product subscriptions is derived from the high degree of interaction of the desktop applications and cloud functionality, which is not available with the desktop applications alone or in conjunction with third-party services.

Accordingly, our product subscriptions are a combined output that is based on the high degree of interaction and interdependence between inputs that are the desktop software and cloud functionality, as suggested in BC29 of ASU 2016-10, and therefore they are highly interrelated as described under ASC 606-10-25-21(c).

* * * *

Please direct your questions or comments to me at (415) 507-5000.

Very truly yours,
/s/ R. Scott Herren
R. Scott Herren
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

cc: |  | Andrew Anagnost, Autodesk President and Chief Executive Officer Steven E. Bochner, Esq., Wilson Sonsini Goodrich & Rosati, Professional Corporation Douglas K. Schnell,, Esq., Wilson Sonsini Goodrich & Rosati, Professional Corporation Michael Turner, Ernst & Young LLP

Marketing of the AutoCAD web and mobile apps Lynn Wuthnow Senior Marketing Manager, AutoCAD Family

Autodesk.com and organic search landing pages

AutoCAD mobile app Product Center

AutoCAD Product Center

AutoCAD LT Product Center

Organic Search Landing Pages

Social Media

Facebook Posts

Facebook Posts

Facebook Posts

Twitter Posts

Instagram Posts

AutoCAD Blog Postings (AutoCAD web app)

AutoCAD Blog Postings (AutoCAD mobile app)

AutoCAD Blog Postings (Shared Views)

AutoCAD mobile app YouTube Channel

Autodesk generated YouTube videos featuring the AutoCAD web and mobile apps

Channel Partner Sales and Marketing Assets and Training

Brochure Comparison Guides Cheat Sheets

Channel Partner Marketing Assets Web, email and banner ad copy (localized): Email Templates (Customized with Partner Logo): Social Media Imagery and Copy Call Guides

Channel Partner Customer Presentation

AutoCAD Presentation – Channel Sales Conference APAC

AutoCAD Product Overview Brainshark for Channel Sales

Marketing Campaigns and Paid Media

Campaign Landing page

Campaign Landing page

AutoCAD Prospects/Legacy AutoCAD Maintenance Customers AutoCAD Subscribers Email Campaigns

AutoCAD mobile app Ad Creative

AutoCAD mobile app Ad Creative

Paid Search: AutoCAD mobile app

Worldwide User Conference Autodesk University

Autodesk University Classes (AutoCAD web and mobile app focused)

Autodesk University Classes (AutoCAD web and mobile app focused)

Autodesk University Classes (AutoCAD web and mobile app focused)

Autodesk University Classes (AutoCAD web & mobile app focused)

Post-Purchase Onboarding Subscriber Emails

AutoCAD and AutoCAD LT Post Purchase Emails

AutoCAD Post Purchase Emails

AutoCAD mobile app Partnerships

AutoCAD mobile app and Apple AutoCAD was featured at Apple’s keynote event in Brooklyn, New York, where Apple introduced the new iPad Pro and Apple Pencil. “For the first time, Autodesk will be bringing the desktop engine of AutoCAD to the iPad. This will allow customers to view and edit files that contain hundreds of thousands of objects that you see here with performance as fast as the fastest PCs.”

AutoCAD mobile app and Google Google is leveraging the AutoCAD logo within the Chromebook email to new users.