(March 6)@ (Corrects paragraph 5 of March 6 story to drop reference to Autodesk changing business model under pressure from hedge funds)
March 6 (Reuters) - AutoCAD design software maker Autodesk Inc reported a smaller-than-expected loss in the fourth quarter as it signed up more subscribers, driving its stock up 10 percent in after-hours trading on Tuesday.
The San Rafael, California-based company, which competes with Adobe Systems, Ansys and Dassault Systemes for design software customers, is gaining from a shift to a subscription-based business model that helps bring in more recurring revenue.
Autodesk's subscription revenue, which makes up over half its total revenue, more than doubled to $293.7 million in the quarter ending Jan. 31, while annualized recurring revenue (ARR) rose 25 percent to $2.05 billion.
"The continued positive trends we're seeing in ARR are clear signals that the transition is working," Chief Executive Andrew Anagnost said on a call with analysts.
Autodesk began its transition to the subscription model in 2016. The company was under pressure from investors Sachem Head Capital Management and Eminence Capital to make changes to its business.
In June last year, the company replaced Carl Bass as CEO with Anagnost, after the two activist hedge funds also pushed for cost cuts and management changes. Autodesk's shares have nearly doubled in value since 2016.
As part of its long-term plan, the company will seek fewer but higher-value subscriptions from businesses, Anagnost added.
"The imperative for Autodesk is to maintain their subscription base as they raise maintenance prices, while keeping competitors (e.g. Dassault) from making inroads into their manufacturing (customer) base," Wedbush Securities analyst Steve Koenig said via email.
Autodesk reported a net loss of $173.5 million compared with $173.4 million a year earlier. Excluding one-time items, Autodesk lost 9 cents per share, smaller than the 11 cents analysts on average were expecting, according to Thomson Reuters I/B/E/S.
Total revenue rose 15.7 percent to $553.8 million, higher than analysts' expectations of $544.7 million. (Reporting by Laharee Chatterjee in Bengaluru; Editing by Sai Sachin Ravikumar)