SEC Filing | Autodesk, Inc.

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adsk-20210731

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, 2021


☐			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.

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 August 27, 2021, registrant had outstanding 219,850,441 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 3 1 , 2021 and 2020	4

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended July 3 1 , 2021 and 2020	5

	Condensed Consolidated Balance Sheets as of July 3 1 , 2021 and January 31, 2021	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 3 1 , 2021 and 2020	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	52

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69

Item 3.	Defaults Upon Senior Securities	69

Item 4.	Mine Safety Disclosures	69

Item 5.	Other Information	69

Item 6.	Exhibits	70

	Signatures	71

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,
	2021		2020		2021		2020
Net revenue:
Subscription	$	1,016.7	$	841.2	$	1,964.2	$	1,644.2
Maintenance	16.9		51.2		36.0		113.3
Total subscription and maintenance revenue	1,033.6		892.4		2,000.2		1,757.5
Other	26.1		20.7		48.8		41.3
Total net revenue	1,059.7		913.1		2,049.0		1,798.8
Cost of revenue:
Cost of subscription and maintenance revenue	76.0		58.5		144.5		115.9
Cost of other revenue	15.8		15.0		29.9		32.1
Amortization of developed technologies	13.6		7.4		23.8		14.8
Total cost of revenue	105.4		80.9		198.2		162.8
Gross profit	954.3		832.2		1,850.8		1,636.0
Operating expenses:
Marketing and sales	398.8		350.9		775.9		692.2
Research and development	276.9		232.5		542.4		449.9
General and administrative	119.4		93.2		231.3		198.0
Amortization of purchased intangibles	11.1		9.5		19.3		19.2

Total operating expenses	806.2		686.1		1,568.9		1,359.3
Income from operations	148.1		146.1		281.9		276.7
Interest and other expense, net	(9.3)		(17.1)		(11.7)		(57.2)
Income before income taxes	138.8		129.0		270.2		219.5
(Provision) benefit for income taxes	(23.2)		(30.8)		1.0		(54.8)
Net income	$	115.6	$	98.2	$	271.2	$	164.7
Basic net income per share	$	0.53	$	0.45	$	1.23	$	0.75
Diluted net income per share	$	0.52	$	0.44	$	1.22	$	0.74
Weighted average shares used in computing basic net income per share	219.8		219.2		219.7		219.2
Weighted average shares used in computing diluted net income per share	222.5		222.2		222.2		222.0

See accompanying Notes to Condensed Consolidated Financial Statements.

AUTODESK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Net income	$	115.6	$	98.2	$	271.2	$	164.7
Other comprehensive (loss) income, net of reclassifications:
Net gain (loss) on derivative instruments (net of tax effect of $(1.7), $2.3, $(3.4) and $1.9, respectively)	9.5		(19.5)		19.5		(15.5)
Change in net unrealized gain on available-for-sale debt securities (net of tax effect of zero, zero, zero and $0.1, respectively)	3.8		0.9		7.8		1.3
Change in defined benefit pension items (net of tax effect of zero for all periods presented)	0.1		—		0.2		(0.3)
Net change in cumulative foreign currency translation (loss) gain (net of tax effect of $1.2, $(0.4), $(0.6) and $(0.4), respectively)	(25.1)		43.2		(15.0)		20.3
Total other comprehensive (loss) income	(11.7)		24.6		12.5		5.8
Total comprehensive income	$	103.9	$	122.8	$	283.7	$	170.5

See accompanying Notes to Condensed Consolidated Financial Statements.

AUTODESK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)


	July 31, 2021		January 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	923.5	$	1,772.2
Marketable securities	1.4		4.0
Accounts receivable, net	357.8		643.1

Prepaid expenses and other current assets	263.3		206.2
Total current assets	1,546.0		2,625.5

Computer equipment, software, furniture and leasehold improvements, net	198.3		192.8
Operating lease right-of-use assets	384.3		416.7
Intangible assets, net	511.3		199.3
Goodwill	3,562.2		2,706.5
Deferred income taxes, net	739.6		763.1
Long-term other assets	478.9		375.9
Total assets	$	7,420.6	$	7,279.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	108.4	$	122.5
Accrued compensation	216.5		322.6
Accrued income taxes	21.9		42.6
Deferred revenue	2,521.0		2,500.9
Operating lease liabilities	87.7		71.4


Other accrued liabilities	131.9		194.7
Total current liabilities	3,087.4		3,254.7
Long-term deferred revenue	779.4		859.3
Long-term operating lease liabilities	358.9		396.0
Long-term income taxes payable	21.1		15.9
Long-term deferred income taxes	60.4		11.4
Long-term notes payable, net	1,638.4		1,637.2
Long-term other liabilities	147.2		139.8
Stockholders’ equity:

Common stock and additional paid-in capital	2,780.7		2,578.9
Accumulated other comprehensive loss	(113.4)		(125.9)
Accumulated deficit	(1,339.5)		(1,487.5)
Total stockholders’ equity	1,327.8		965.5
Total liabilities and stockholders' equity	$	7,420.6	$	7,279.8

See accompanying Notes to Condensed Consolidated Financial Statements.

AUTODESK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Six Months Ended July 31,
	2021		2020
Operating activities:
Net income	$	271.2	$	164.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	72.4		60.0
Stock-based compensation expense	266.0		194.1
Deferred income taxes	25.7		14.5


Other	7.9		36.0
Changes in operating assets and liabilities, net of business combinations:
Accounts receivable	292.6		162.7
Prepaid expenses and other assets	(157.5)		(52.0)
Accounts payable and other liabilities	(150.8)		(42.8)
Deferred revenue	(70.6)		(130.0)
Accrued income taxes	(18.8)		11.3
Net cash provided by operating activities	538.1		418.5
Investing activities:
Purchases of marketable securities	—		(17.0)
Sales and maturities of marketable securities	4.0		11.0

Capital expenditures	(36.1)		(46.7)
Purchases of developed technologies	(7.7)		(4.8)
Business combinations, net of cash acquired	(1,154.6)		—
Other investing activities	8.0		(54.3)
Net cash used in investing activities	(1,186.4)		(111.8)
Financing activities:
Proceeds from issuance of common stock, net of issuance costs	64.7		58.5
Taxes paid related to net share settlement of equity awards	(61.9)		(39.6)
Repurchases of common stock	(198.7)		(209.0)


Repayment of debt	—		(450.0)

Other financing activities	—		(2.5)
Net cash used in financing activities	(195.9)		(642.6)
Effect of exchange rate changes on cash and cash equivalents	(4.5)		1.0
Net decrease in cash and cash equivalents	(848.7)		(334.9)
Cash and cash equivalents at beginning of period	1,772.2		1,774.7
Cash and cash equivalents at end of period	$	923.5	$	1,439.8

Supplemental cash flow disclosure:
Non-cash financing activities:
Fair value of common stock issued to settle liability-classified restricted stock units	$	—	$	28.7
Fair value of common stock issued related to business combination (See Note 8)	$	2.6	$	—

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, 2021, and for the three and six months ended July 31, 2021 and 2020, 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 March 2020, the World Health Organization declared the outbreak of a disease caused by a novel strain of the coronavirus (COVID-19) to be a pandemic. This pandemic has created and may continue to create significant uncertainty in the macroeconomic environment which, in addition to other unforeseen effects of this pandemic, may adversely impact our results of operations. As the COVID-19 pandemic continues to develop, many of our estimates could require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve our estimates may change materially in future periods. In addition, the results of operations for the three and six months ended July 31, 2021, are not necessarily indicative of the results for the entire fiscal year ending January 31, 2022, or for any other period. Further, the balance sheet as of January 31, 2021, 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, 2021. 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, 2021, filed on March 19, 2021.

Change in presentation and immaterial correction of an error

During the quarter ended July 31, 2021, the Company changed its presentation on the Condensed Consolidated Balance Sheet for intangible assets. These amounts were previously presented in “Developed technologies, net” and “Long-term other assets” and are now presented as “Intangible assets, net.” Accordingly, prior period amounts have been reclassified to conform to the current period presentation. This presentation change did not impact “Total assets” on the Condensed Consolidated Balance Sheets and had no impact on the Company's Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income, and Condensed Consolidated Statements of Cash Flows.

The effects of the change on the Consolidated Balance Sheet as of January 31, 2021, was as follows:


	As Reported January 31, 2021		Effect of Change in Presentation		As Adjusted January 31, 2021
Intangible assets, net	$	88.6	$	110.7	$	199.3
Long-term other assets	486.6		(110.7)		375.9
Total assets	7,279.8		—		7,279.8

During the quarter ended April 30, 2021, the Company changed its presentation on the Condensed Consolidated Balance Sheets for investments in debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans, including correcting the classification as current and non-current assets. These amounts were previously presented as current “Marketable securities” and are now presented as “Prepaid expenses and other current assets” and “Long-term other assets” on the Condensed Consolidated Balance Sheets. Accordingly, prior period amounts have been reclassified to conform to the current period presentation. These presentation and classification changes did not impact “Total assets” on the Condensed Consolidated Balance Sheets and had no impact on the Company's Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statement of Cash Flows.

The effects of the changes on the Consolidated Balance Sheets as of January 31, 2021, were as follows:


	As Reported January 31, 2021		Effect of Changes in Presentation		As Adjusted January 31, 2021
Marketable securities	$	85.0	$	(81.0)	$	4.0
Prepaid and other current assets	198.9		7.3		206.2
Long-term other assets	412.9		73.7		486.6
Total current assets	2,699.2		(73.7)		2,625.5
Total assets	7,279.8		$	—	7,279.8

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, 2021, that are applicable to the Company.

Recently issued accounting standards not yet adopted

In March 2020, FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU No. 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020, through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. Autodesk will apply the expedients in ASU No. 2020-04 through December 31, 2022. Autodesk does not believe ASU No. 2020-04 will have a material impact on its consolidated financial statements.

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 goods 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 July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Net revenue by product family:
Architecture, Engineering and Construction	$	478.7	$	397.0	$	921.3	$	779.7
AutoCAD and AutoCAD LT	304.4		271.9		589.5		534.1
Manufacturing	207.7		185.5		405.0		368.4
Media and Entertainment	58.5		53.3		113.5		105.9
Other	10.4		5.4		19.7		10.7
Total net revenue	$	1,059.7	$	913.1	$	2,049.0	$	1,798.8

Net revenue by geographic area:
Americas
U.S.	$	347.3	$	309.5	$	671.3	$	610.1
Other Americas	75.5		62.0		143.2		123.6
Total Americas	422.8		371.5		814.5		733.7
Europe, Middle East and Africa	410.2		354.7		792.7		699.5
Asia Pacific	226.7		186.9		441.8		365.6
Total net revenue	$	1,059.7	$	913.1	$	2,049.0	$	1,798.8

Net revenue by sales channel:
Indirect	$	702.2	$	639.3	$	1,363.5	$	1,262.7
Direct	357.5		273.8		685.5		536.1
Total net revenue	$	1,059.7	$	913.1	$	2,049.0	$	1,798.8

Net revenue by product type:
Design	$	944.0	$	821.4	$	1,829.1	$	1,619.1
Make	89.6		71.0		171.1		138.4
Other	26.1		20.7		48.8		41.3
Total net revenue	$	1,059.7	$	913.1	$	2,049.0	$	1,798.8

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 short-term, long-term, and unbilled deferred revenue. As of July 31, 2021, Autodesk had remaining performance obligations of $4.14 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 $2.85 billion or 69% of our remaining performance obligations as revenue during the next 12 months. We expect to recognize the remaining $1.29 billion or 31% of our remaining performance obligations as revenue thereafter.

The amount of remaining performance obligations may be impacted by 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, 2021. 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 July 31, 2021 and 2020, that was included in the deferred revenue balances at January 31, 2021 and 2020, was $725.9 million and $641.9 million, respectively. Revenue recognized during the six months ended July 31, 2021 and 2020, that was included in the deferred revenue balances at January 31, 2021 and 2020, was $1.56 billion and $1.43 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 $650.0 million line of credit facility. See Note 14, “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 36% of Autodesk’s total net revenue for both the three and six months ended July 31, 2021. Total sales to Tech Data accounted for 37% and 38% of Autodesk’s total net revenue for the three and six months ended July 31, 2020, respectively. 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 33% and 26% of trade accounts receivable at July 31, 2021, and January 31, 2021, respectively. Ingram Micro Inc. (“Ingram Micro”) accounted for 9% of Autodesk's total net revenue during both the three and six months ended July 31, 2021. Total sales to Ingram Micro accounted for 10% of Autodesk’s total net revenue for both the three and six months ended July 31, 2020. 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, 2021, and January 31, 2021:


			July 31, 2021
			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Level 1		Level 2		Level 3
Cash equivalents (1):





	Money market funds		$	206.5	$	—	$	—	$	206.5	$	206.5	$	—	$	—
	Other (2)		1.6		—		—		1.6		1.0		0.6		—


Marketable securities:
	Short-term








		Other (3)	—		1.4		—		1.4		1.4		—		—









Mutual funds (4) (5)			70.2		22.8		—		93.0		93.0		—		—
Strategic investments derivative assets (5)			0.1		0.4		(0.3)		0.2		—		—		0.2
Derivative contract assets (5)			0.4		10.1		(0.2)		10.3		—		10.3		—
Derivative contract liabilities (6)			—		—		(6.8)		(6.8)		—		(6.8)		—
		Total	$	278.8	$	34.7	$	(7.3)	$	306.2	$	301.9	$	4.1	$	0.2

____________________

(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 and certificates of deposit.

(3)Consists of equity securities.

(4)See Note 12, “Deferred Compensation” for more information.

(5)Included in “Prepaid expenses and other current assets” or “Long-term other assets” in the accompanying Condensed Consolidated Balance Sheets.

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


			January 31, 2021
			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Level 1		Level 2		Level 3
Cash equivalents (1):


	Commercial paper		$	36.0	$	—	$	—	$	36.0	$	—	$	36.0	$	—


	Money market funds		686.9		—		—		686.9		686.9		—		—


	Other (2)		4.4		—		—		4.4		4.0		0.4		—
Marketable securities:




	Other (3)		4.0		—		—		4.0		—		4.0		—


Mutual funds (4) (5)			64.5		16.5		—		81.0		81.0		—		—







Strategic investments derivative asset (5)			0.1		0.4		(0.3)		0.2		—		—		0.2
Derivative contract assets (5)			0.4		9.8		(0.4)		9.8		—		9.8		—
Derivative contract liabilities (6)			—		—		(17.5)		(17.5)		—		(17.5)		—
		Total	$	796.3	$	26.7	$	(18.2)	$	804.8	$	771.9	$	32.7	$	0.2

____________________

(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 and certificates of deposit.

(3)Consists of commercial paper and municipal bonds.

(4)See Note 12, “Deferred Compensation “ for more information.

(5)Included in “Prepaid expenses and other current assets,” or “Long-term other assets,” in the accompanying Condensed Consolidated Balance Sheets.

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

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.

As of both July 31, 2021, and January 31, 2021, 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 unrealized gains for securities with net gains in accumulated other comprehensive income were not material for the six months ended July 31, 2021.

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 July 31, 2021, and January 31, 2021. There were no write offs of accrued interest receivables for the six months ended July 31, 2021 and 2020.

There was no realized gain or loss for the sales or redemptions of debt securities during both the six months ended July 31, 2021 and 2020. Gains and losses resulting from the sale or redemption of debt securities are recorded in “Interest and other expense, net” on the Company's Condensed Consolidated Statements of Operations.

There were zero and $4.0 million in proceeds from the sale and maturity of marketable debt securities for the three and six months ended July 31, 2021, respectively. Proceeds from the sale and maturity of marketable debt securities for both the three and six months ended July 31, 2020, was $11.0 million.

Strategic investment equity securities

As of July 31, 2021, and January 31, 2021, Autodesk had $129.5 million and $134.1 million, respectively, in direct investments in privately held companies. These strategic investment 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.

Adjustments to the carrying value of our strategic investment equity securities with no readily determined fair values measured using the measurement alternative were as follows:


	Six Months Ended July 31,				Cumulative Amount as of
	2021		2020		July 31, 2021
Upward adjustments (1)	$	5.6	$	3.0	$	21.6
Negative adjustments, including impairments (1)	(8.8)		(34.8)		(69.4)
Net adjustments	$	(3.2)	$	(31.8)	$	(47.8)

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(1)Included in “Interest and other expense, net” on the Company's Condensed Consolidated Statements of Operations.

During the three and six months ended July 31, 2021, Autodesk recognized gains of none and $8.1 million on the disposition of strategic investment equity securities, respectively. There were no recognized gains or losses on the disposition of strategic investment equity securities for both the three and six months ended July 31, 2020.

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 notional amounts of these contracts are presented net settled and were $1.08 billion at July 31, 2021, and $1.14 billion at January 31, 2021. Outstanding contracts are recognized as either assets or liabilities on the Company's Condensed Consolidated Balance Sheet at fair value. The majority of the net loss of $4.6 million remaining in “Accumulated other comprehensive loss” as of July 31, 2021, is expected to be recognized into earnings within the next 24 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, 2021 and 2020:


	Three Months Ended July 31, 2021
	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	$	1,016.7	$	16.9	$	76.0	$	398.8	$	276.9	$	119.4

(Loss) on cash flow hedging relationships in Subtopic ASC 815-20
Foreign exchange contracts
Amount of (loss) reclassified from accumulated other comprehensive income into income	$	(4.5)	$	(0.6)	$	—	$	(0.2)	$	(0.2)	$	(0.1)

	Six Months Ended July 31, 2021
	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	$	1,964.2	$	36.0	$	144.5	$	775.9	$	542.4	$	231.3

(Loss) gain on cash flow hedging relationships in Subtopic ASC 815-20
Foreign exchange contracts
Amount of (loss) gain reclassified from accumulated other comprehensive income into income	$	(9.4)	$	(1.2)	$	0.3	$	0.6	$	(0.2)	$	0.4