Autodesk, Inc. (ADSK) on Q1 2022 Results - Earnings Call Transcript
Operator: Good day, and thank you for standing by. Welcome to the Autodesk, Inc. Q1 2022 Earnings Conference Call. At this time, all participants are in a listen-only model. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Simon Mays-Smith, VP, Investor Relations. Please go ahead. Simon Mays-Smith: Thanks operator, and good afternoon. Thank you for joining our conference call to discuss the results of our first quarter of fiscal year 2022. On the line with me are Andrew Anagnost, our CEO, and Debbie Clifford, our Chief Financial Officer. Today's conference call is being broadcast live via webcast. In addition, a replay of the call will be available at autodesk.com/investor. You can find the earnings press release, slide presentation and transcript of today's opening commentary on our Investor Relations website following this call. During the course of this call, we may make forward-looking statements about our outlook, future results and related assumptions, acquisitions, products and product capabilities, and strategies. These statements reflect our best judgment based on currently known factors. Actual events or results could differ materially. Please refer to our SEC filings, including our most recent Form 10-K, for important risks and other factors including developments in the COVID-19 pandemic and the resulting impact on our business and operations that may cause our actual results to differ from those in our forward-looking statements. Forward-looking statements made during the call are being made as of today. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Autodesk disclaims any obligation to update or revise any forward-looking statements. During the call, we will quote a number of numeric or growth changes as we discuss our financial performance and unless otherwise noted, each such reference represents a year-on-year comparison. All non-GAAP numbers referenced in today’s call are reconciled in our press release or excel financials and other supplemental materials available on our Investor Relations website. And now, I will turn the call over to Andrew. Andrew Anagnost: Thank you, Simon, and welcome everyone to the call. I hope you and your families remain safe and healthy. While parts of the world emerge from the pandemic, others are entering the eye of the storm. I especially want to acknowledge our colleagues, family and friends in India. We are thinking about you and we are helping wherever we can. Thank you to all our employees and their families, our partners, and customers for their continued resilience, patience, and commitment. Our first quarter marks an important inflection point. While solid execution, a resilient subscription business model, and continued secular shift to the cloud underpinned our strong first quarter results, waning uncertainty and growing confidence in our end markets generated momentum. Robust growth in new product subscriptions, combined with improving usage and renewal rates, accelerated billings and RPO growth to 10% and 22%, respectively. Together, these reinforce our confidence that we are through the revenue growth trough and on track to achieve our fiscal 2022 and 2023 goals. Debbie Clifford: Thanks, Andrew. I am very excited to be back. Looking at the first quarter’s results, several factors contributed to our strong financial performance, including robust growth in new product subscriptions, accelerating digital sales, stronger than expected upfront revenue and improving subscription renewal rates. In addition, a one-month contribution from Innovyze and foreign exchange rates provided a modest tailwind to the quarter. Andrew Anagnost: Thank you, Debbie. Let me finish by giving you an update on our strategic growth initiatives. The secular trends we have been investing in for years have accelerated during the pandemic. The digitization of AEC, the convergence of design and make, and our expansion into adjacent verticals through organic investment and acquisitions are growing our total addressable market. The evolution of our business model, the value generated by the growing connectivity of our platform for new and legacy customers, and the hardening of our systems to non-compliant users, enable us to attract and retain more of that potential opportunity, growing our ecosystem and the usage and value we generate from it. Turning to AEC, our unique vision is to connect all the phases of construction with end-to-end, cloud-based solutions that combine horizontal data flow with best-in-class functionality to enable seamless collaboration from planning, design, pre-construction, construction, asset operations and maintenance. The breadth and depth of our solutions distinguish us in the market and we continue to build on that advantage through industry leading R&D, which we sustained through the pandemic and acquisitions. Our latest product releases reflect that. For example, Revit 2022 is a bridge to more open and interoperable ways of working that accelerate our design customers' digital transformation and improve communication of design intent across all disciplines and project phases. For construction teams, we released Autodesk Build, Autodesk Takeoff, and Autodesk BIM Collaborate, as well as product enhancements which further empower construction teams to drive better business outcomes such as winning more business, reducing rework, delivering projects on time and improving safety by connecting data, workflows and teams across the project lifecycle. As the construction backlog comes back online, and the new project pipeline builds, we are emerging from the pandemic stronger. This is reflected in our success during the quarter. For example, Burns & McDonnell is a family of companies bringing together an unmatched team of 7,600 engineers, construction professionals, architects, planners, technologists and scientists to design and build critical infrastructure projects. It is at the forefront of technology use and having invested in Revit and BIM 360 Design some time ago, most of its data is already in the cloud. Operator: Thank you. Our first question comes from the line of Jay Vleeschhouwer from Griffin Securities. Your line is now open. Jay Vleeschhouwer: Thank you. Good evening, Andrew and Debbie. Let me ask you, Andrew first, a couple of business and technology or technology evolution questions. You highlighted infrastructure, and the company has been in that business for many, many years and you’ll recall that once upon a time, it was in fact a reporting segment and maybe should be again at some point. Could you describe the main ways in which that business has evolved over the last number of years in terms of its scope or its customer base and what the vision really is for that business in terms of perhaps adding new types of customers, such as owner operators that have not really been a large part of your business profile to date? Secondly, since we're halfway between AU 2020 and AU 2021, could you update us on some of the important initiatives that you yourself highlighted during your Q&A session at AU six months ago? Namely, the Forge roadmap and its implications for you long-term, and then secondarily, sharing technology across the portfolio and across industries. In other words, leveraging your R&D more and more across the company in that respect? Andrew Anagnost: Yes. All right, Jay. So let me start with the infrastructure discussion. So here's what's fundamentally staying with the business. One, we've been winning more and more department of transportation as we've progressed since the last time the infrastructure business was broken out. And what we did is we focused our organic portfolio very much on road and rail work, bridges, roads and rails, and created a lot of workflows between Civil 3D and InfraWorks and some of our specific tools. And we've been very happy with the progress we've been making there and we continue that organic investment targeting those pieces of infrastructure. We don't feel it needs to be broken out into a separate business because I think you might recall, since those days, we've moved our entire sales organization to account-based sales. So it's very easy to cover these types of customers with the kinds of support that we need to engage with them directly. Look, buttress next, as you can see with what we've been doing with Tandem and the digital twin work, and also with what we've required with Innovyze with their Info360 solution and some of the tools around there with digital twins for water waste management and water management, we are definitely moving closer to things that are directly relevant to owner operators, and you would expect to see us do more of that as time progresses, okay. So that kind of gives you a sense for what we are looking at and how we've gotten here. With regards to AU initiatives, I don't want to kind of preempt next day use announcements. But what I'll tell you is we continue to add additional capabilities to Forge into the APIs. And I think in this coming AU, you're going to hear me talk a lot more about some of the common experiences we are creating across some of our new environments that we are building for our various customers. So I want to hold onto some of that news as we move forward to the next AU. But the hint is there's some common data experiences. There's some common ways of managing and accessing projects that we are developing and deploying. All things that are relevant to making the platform more powerful for bringing together the various products that our customers use. Jay Vleeschhouwer: Okay. For Debbie quickly, you highlighted strong growth in product subs. If you're able to look at that in absolute terms, how would that product subs level of business compare with, let's say the second and third quarter of last year, and perhaps even the fourth quarter. Are you now perhaps the highest level you've been in four or five quarters as far as product subs are concerned? Debbie Clifford: The short answer is yes, we've returned to growth after a period of several quarters that were impacted by COVID. And so we're pleased with the growth that we saw in Q1 and that's evidenced in the revenue results. Jay Vleeschhouwer: Thank you. Operator: Thank you. Our next question comes from the line of Saket Kalia from Barclays. Your line is now open. Saket Kalia: Okay. Great. Hey, can you hear me okay? Debbie Clifford: Yes. Saket Kalia: Excellent. Hey, thanks so much for taking my questions and welcome Debbie. Maybe first for you, Andrew, I'd love to dig into the new business acceleration you've touched on as we are starting this recovery. Maybe in particular, how much of this recovery do you feel is in demand? That is tied to increased engineering hiring versus perhaps pent-up demand for tools post-pandemic just as we kind of think about the pace of this recovery going forward. Does that make sense? Andrew Anagnost: Yes. It's hard for me to break it in – break it down into increased engineering hiring versus kind of pent-up demand. So I can't really give you a fine grain view on that. What I can tell you is that usage of some of our more engineering intensive products is going up pretty significantly, okay. And we talked a lot about usage every year with regards to how the monthly active usage and the daily active usage going in various countries. What we've seen is the majority of our countries are now at or above pre-COVID levels. The UK is now above pre-COVID levels. The U.S. still struggling a little bit to get above pre-COVID levels, but showing a lot of robust impact. You also noticed – I think you probably watch the indexes out there, the PMI and the ABI indexes in particular. We have always found those indexes to be lagging indicators of our business. So they actually tell us that something has already happened with the purchasing behavior of our customers. And what you've seen is those indices continuing to shift towards growth, which hints at Saket that it's the book of work that's going up. All right, which means people are going to hire more engineers, they're going to hire more people and they're going to engage – they're going to be using our products more. So it's probably driven mostly by hiring related to the book of business of our customers is going up. The indices seem to indicate that as a lagging indicator of what we've seen in terms of purchasing behavior and usage, but that's kind of as much granularity as I can give you on that. Saket Kalia: That's super helpful, Andrew. Thanks. Maybe kind of follow-up for you Debbie, you touched on this a little bit in the prepared remarks. But I want to just talk about the acceleration in revenue this year. I think we get some of the drivers, but I'd love to sort of get your take and perhaps as part of that, your confidence in that growth lasting into fiscal 2023 and for that matter longer term as well? Debbie Clifford: Thanks, Saket. I start by saying, so Q1 is our seasonally smallest quarter and our guidance assumes that we'll see improving results as the year progresses, which is consistent with what we're seeing. We're seeing uncertainty lessening, growing confidence from our customers and our channel and improving demand on our end markets, which is resulting in an accelerating growth in new business. We're also seeing increasing renewal rates, strong direct business, particularly through the e-store. Our total direct revenue grew 25% year-over-year in Q1, and now represents 33% of total revenue. We're also pleased that we're starting to see momentum and key indicators like RPO, which grew 22% year-over-year in Q1. And it's because of these factors that we're confident in the ramp during fiscal 2022. Now if I shift attention to fiscal 2023, and even beyond that, let me just break that down a little bit. I mentioned on the call that since I rejoined Autodesk, I've been focused on two primary things. The first is reacquainting myself with everything Autodesk, the team, the strategy, what's happened while I was away for a couple of years. And the second is digging deep to get a solid understanding of the fiscal 2022 budgets and our fiscal 2023 financial goals. It’s because of that work that I see significant opportunities for growth, including growing TAM from things like accelerating digitization in AEC, the convergence of design and make in manufacturing and expansion into adjacent verticals, like you saw us do recently with the acquisition of Innovyze that got us into water infrastructure. We're also focused on further monetizing our TAM in a variety of ways. Some examples include conversion of non-compliant users. Andrew mentioned that billings from non-compliant users almost doubled year-over-year in Q1, and we're seeing more direct selling as I just mentioned. And that direct selling gets us greater price realization. That is another growth driver for us. This is all against a macroeconomic backdrop that we see improving. And it's because of all of this that we're confident in our fiscal 2023 revenue growth potential and the free cash flow target of $2.4 billion in that period. Now I've been back for 90 days, less than 90 days actually, so next step for me is more work on the long range financial plan and getting a deeper understanding of our past in fiscal 2024 and beyond. Our goal is to drive double-digit growth using some kind of Rule of 40 type framework over time. Saket Kalia: Very helpful. Thanks for your time guys. Operator: Thank you. Our next question comes from the line of Adam Borg from Stifel. Your line is now open. Adam Borg: Hey, guys, and thanks for taking the question. Maybe just on Upchain. So obviously, I know that just closed a few weeks back. I was just curious if you can talk more about the vision over time of integrating Upchain with Fusion and Forge and how we should even think about the convergence of both Vault and Upchain just given that the similarities obviously once on-prem and once in the cloud? Andrew Anagnost: Yes. Excellent question, Adam. So as you know, Upchain is PLM and PDM, Product Data Management and Product Lifecycle Management in the cloud. So it's a fully cloud native application. It's got both Product Data Management and PLM. It understands both files and cloud information models like what power fusion, for example. Our vision for how this is going to work, if Fusion already has a stack built on its cloud information model, that goes all the way through simple data management up through into Product Lifecycle Management. Upchain will likely replace that capability within Fusion over time. But more importantly, what Upchain does is it supports a whole swath of legacy applications from our competitors and from other places. So what we're going to do is we're going to go into counts with legacy applications or where we see overlap with other applications and combined a Fusion stack and the Upchain stack to handle the whole swath of data our customers use. Now ultimately as well what we're going to do is we're going to integrate Upchain with Vault, so that Vault can now have a extension to the cloud. We're not going to force our Vault users to move from on-prem to the cloud. Vault is a very popular application, we sell a lot of it every quarter, and we're going to continue to update and maintain it. You might've noticed that we just released mobile and extension to it in some web extent – additional web extensions capability for Vault. So we continue to drive Vault, but we are going to integrate Vault and Upchain over time, which will give our Vault customers a path to putting all their data in the cloud as they see fit to do it. But we're not going to force that migration. So look for it to replace the guts of Fusion lifecycle over time and integrate with Fusion cloud information model and look for it to integrate with Vault over time and provide a path for Vault customers to the cloud. And then ultimately look for us to be going after legacy systems with a combination of our Fusion offering and Upchain capability to bring all the customer's data and all the applications the customer use together in one robust cloud environment. Adam Borg: That's great. Andrew. Maybe just a quick follow-up just on the Autodesk Construction Cloud, you cited some nice examples of some customer wins in the quarter. Just as you think about that business over the course of the year, especially with the improving macro kind of, how are you thinking about that business as the year progresses? Thanks so much. Andrew Anagnost: Yes. We have really high expectations for how that business progresses as the year progresses and we're getting – we're definitely getting some good indications. One of the things we watch are the bid, the activity on Bid Board through our BuildingConnected service. That activity has been going up in Q1. It's been progressively going up each month, which is great. So we see a lot of activity heading into there. Just like a lot of our businesses, we expect some of the new business to be backend loaded, but we're super happy with where we are right now. We had a good launch of Autodesk Build, it's getting good take-up and monthly active usage from some of our customers, new customers are embracing it. Our international expansion efforts that we put on hold last year because of the pandemic are now moving into full gear this year. Later this year, we rollout Autodesk Build to the channel and that's going to accelerate Build’s business. And one of the things I just want to highlight is why we're winning, okay, and why we continue to win business and why we're so incredibly confident about the future. Here's what customers tell us, right. The end-to-end solution that we offer all the way from planning, early planning through design, through pre-construction, through pre-construction planning to site execution all the way to digital handoff to actual maintenance and operations of the asset. Nobody has this, especially to the depth that we have in each one of those disciplines. The other thing that people are really excited about is the deep integration with BIM and in fact that it's a BIM-native platform. It speaks BIM from the get-go, it will always speak BIM, and it's really good at it. This is driving more and more displacement in competitive solutions and accounts where we overlap. And one of the other big things that we hear from customers is our business model flexibility, all right. Customers love that they can buy from us, where they need to buy from us and how they need to buy from us, all right. If you need a project-based license, we've got it. If you need a consumption-based model, we got it. If you need a per-user model, we got it. We adapt and flex our business model to whatever the particular customer's needs are or their ecosystems needs are. And we can do it anywhere in the world. So if we're dealing with an international customer, they know that when they standardize on us, they can get everywhere with the solution we do. So that's why we're winning. That's why we're bullish as we move into the next year and why we're excited about the construction market becoming hot and active again. The digitalization of this market a multi-year trend, there's lots of opportunity for lots of people, and we're seeing lots of validation in the direction we're heading. And I think it's going to be an exciting year for digital construction. Adam Borg: Great. Thanks again. Operator: Thank you. Our next question comes from the line of Joe Vruwink from Baird. Your line is now open. Joseph Vruwink: Great. Hi, everyone. Maybe just to focus on Fusion 360. I think the first disclosure on commercial subs was about a year ago and 152,000 is up about 80% since then. Andrew, when you mentioned that business being at a tipping point or I think you might've surpassed the tipping point, is it just a function of scale and customer awareness now that the product is as large as it is, or are there other dynamics at play that you would point to as kind of supporting the business through this fiscal year? Andrew Anagnost: Well, there's a lot of things. One, there's the increased interest in the cloud, all right. There's the simple network effect of people saying, you know what, I displaced my Mastercam solid works with Fusion and you should try that too. It's awesome. So we're getting that network effect of people basically encouraging each other to move forward and get off the legacy systems and move to the cloud with Fusion. So we're seeing some of that. We're also seeing, and this is super important. We're seeing increased purchases within accounts we penetrated previously, which means we're moving from kind of being a niche solution inside these companies or maybe a partially piloted solution to production. And that's also an important driver. And we expect these trends to continue this year and continue moving forward. And one of the really exciting things about this as we talk about growth beyond FY2023 and into FY2024 and FY2025 beyond, the early success we're seeing in Fusion right now is going to be a growth engine that continues to accelerate over the next five years. Especially as we start introducing our new design, our extensions, we already have one for advanced manufacturing. We have various other extensions. There's going to be new extensions in the second half of the year. Those extensions continue to be out there. We're particularly excited that we sold more Fusion than other applications in Q1 without any type of promotional activity. All of this points towards increasing customer demand for what we're doing. Joseph Vruwink: Okay. That's great. And then just on the comment that in regards to your construction end markets, uncertainty is lessening. I appreciate no sale is ever easy. But are there things that become easier. The fact that license compliance billing seemed to have had a good quarter coinciding with a better backdrop. Is that something that accelerates as the year goes on or will you maybe point to other areas of your business as well? Andrew Anagnost: I'm sorry, could you – you want to have a little bit for me on the last part of that, the part of the question what's the key point the question here, sorry. Joseph Vruwink: With uncertainty lessening license compliance and having those conversations seems like that could be one area to benefit. Are there other areas as well? Andrew Anagnost: Yes. Okay. So as I've said, many times license compliance is one of these areas that we're just going to build a steady drum beat on, all right. It's going to be the gift that keeps giving for years and years to come. We do not want to accelerate it unnaturally because we want to bring our customers along with us. We want to keep them happy, help them get compliant. You notice the story that I offered up in Indonesia about that, customer actually buying premium subscription as well as becoming compliant and being happy about how they were able to deploy it. That's the kind of outcomes we want from this solution. So we did see some acceleration. You saw the growth numbers in the opening commentary around non-compliant billings in Q1. But that was off of a Q1 that was previously off. So we had a really strong compare. Don't expect any hockey sticks though the Q1 of this year was better than the Q1 of fiscal 2020. So you're seeing continued growth, which is what we want to see is nice, steady growth in this business. But don't look for any hockey sticks this year. We're back to the path we were on previously. Joseph Vruwink: Great. Thank you very much. Andrew Anagnost: You’re welcome. Operator: Thank you. Our next question comes from the line of Matt Hedberg from RBC Capital. Your line is now open. Matthew Hedberg: Well, great. Thanks for taking my questions. Andrew, I wanted to go back to the construction site again. Obviously, the cost of building just continues to go up from a material spaces. I know you guys have talked about the amount of waste globally that comes from construction site. Is that having a positive impact on pipeline generation as a lot of these construction firms, I just have to think and customers have to become more – way more efficient. Is that a portion of your pipeline growth there? Andrew Anagnost: Matt, that's a very astute observation, all right. It's too early to say the cost of – the increases in cost of material is driving increased focus on digitization. But it is one of those things that we have constantly highlighted as one of the reasons why the value chain for construction needs to digitize because when material prices have gone up the way they have, you can't afford to over purchase in waste materials. So I can't tell you precisely if this is one of the pipeline drivers. But I can tell you that we're mentioning it to customers, and we're having with customers about, hey, conversations with customers. You want to keep your material costs down, digitize, right. Plan for less waste, only order what you need. So it's definitely entering into the conversation. I think it's too early to say if it's driving acceleration in the pipeline. But I think it's likely that it is. Matthew Hedberg: That's really great to hear. And then – thank you for that. And then Debbie, welcome from me as well. I guess, one of the questions that we always get, and I'm sure you get as well, is that sort of what gives you confidence in that kind of that hockey stick cash flow guide for fiscal 2023. Now you had a little bit of time to kind of reflect on the model. What's sort of your view on some of the major drivers? I know we've heard Scott talk about them in the past. But just sort of curious on your perspective that gives you really that confidence that was clear in your remarks? Debbie Clifford: Yes, sure. Matt, good to talk to you too. In large part, it's a lot of the things that I mentioned before. I think it's the combination of a growing TAM as well as further monetization of our TAM. And so that continued digitization in AEC with more innovation in Revit with expanding BIM mandates and ongoing BIM proliferation around the world with the digitization of construction that Andrew just talked about. Even the infrastructure bill could be a wildcard for us. We're hopeful, although nothing is baked into our numbers at this point. But these are all the multiple growth drivers that give me confidence in the ramp. I think some of the other data points that we have out there, I'll repeat because these are the things frankly that I've been looking at to get my own sense of confidence into that ramp into fiscal 2023. The conversion of non-compliant users, the fact that those billings doubled in Q1, and we're seeing more success with that program, the fact that we are selling more direct, that's a driver of growth for us, and ultimately will translate to free cash flow over time. The improving macro economic backdrop, all of these factors combined are what gives me confidence in our ability to achieve our revenue growth potential in fiscal 2023, as well as that free cash flow number of $2.4 billion. Matthew Hedberg: Thanks, Debbie. Andrew Anagnost: Matt, I'll just reinforce some of the things that Debbie said because I don't think we can talk about this enough because – did you notice the list of things she gave there, right. There's a whole set of horizontal things just around the normal business, the non-compliance, the new types of subscription models, the rollouts of consumption, the accelerating growth in our end markets. All of that combined also with the strategic levers around digitization in AEC around the convergence of design and make of what we're seeing with Fusion, and then the whole move into new adjacencies that we're doing. Any one of those things could contribute to viable long-term growth. We have all of those levers to pull. All right, I just want to remind we have all those levers to pull. And in August, we're really good at picking and choosing the levers to pull when we need to pull them. Matthew Hedberg: Sounds great. Thanks a lot guys. Operator: Thank you. Our next question comes from the line of Sterling Auty from JPMorgan. Your line is now open. Sterling Auty: Yes. Thanks. Hi, guys. One housekeeping one to start, can you be specific in terms of what the contribution to the guide is from the acquisitions? Debbie Clifford: Sure, Sterling. The impact on the acquisitions was a one point increase to our revenue guidance range on the year, a one point decrease to our operating margin range on the year, and it was neutral to free cash flow. That's consistent with what we said on the last call. Sterling Auty: All right. Perfect. And then, Andrew, as we think going forward is Fusion 360 always incremental to kind of the installed base of traditional seats or have you already started to see a little bit of conversion one to the other? And if that's the case, what kind of change does that have on kind of the ARR contribution? Andrew Anagnost: Yes. So nobody is moving from Inventor to Fusion right now, okay. It's just not happening, all right. It's actually – most of the businesses about going after incremental seats inside of competitive accounts, especially down market. The one great thing about our strategy is most of the Inventor is bought through collections, which includes Fusion. So if an Inventor user does start to move to Fusion over time, they continue on the same subscription path we'll do. And what we'll do with our collections is some of the extensions that would be available to a vanilla Fusion user that they have to pay for would be included with the collections version. So essentially what you see is a kind of an AFP neutral conversion from Inventor to Fusion, but that's going to take a long time. Most of the Inventor customers are going to stay comfortably where they are. But when they do move, it's essentially AFP neutral in terms of impact on our ARR. It doesn't change the ARR trajectory not materially. Sterling Auty: Excellent. Thank you. Operator: Thank you. Our next question comes from the line of Jason Celino from KeyBanc Capital. Your line is now open. Jason Celino: Great. Thanks for taking my questions. Maybe one, the ambitions in infrastructure, Andrew, you talked about the gains in roads and bridges with improvements to Civil 3D and the expansions in the water here. But how do you think about some of those other areas of infrastructure, maybe some of the electric utilities or other areas? Andrew Anagnost: Yes. So right now, Jason, we're going to stay focused on road and rail and bridges and the things that go along with road and rail and water, that's going to be our focus area. There's a lot of exciting things happening with elastic grid designs and the electrification and things associated with that. We're not going to be focusing on that right now. We may in the future, but right now, if you look at – even if you look at where the infrastructure bill is going for instance. Most of it is going to the upgrading and expanding the deteriorating infrastructure we have in the company around road, rail, bridges, civil and water infrastructure. And that's going to be our sweet spot for awhile – wins in that respect. Jason Celino: Okay. And then you also talked about the – why Autodesk wins in construction which was quite helpful. But you also alluded to the digitization opportunity there just being more broadly bigger. Maybe can you talk about how much of that TAM might be coming from pure greenfield versus displacements of legacy or in-house or other competitor tools? Thank you. Andrew Anagnost: Yes. A lot of the TAM is greenfield. Really sometimes what you're competing with here is some kind of free tool and excel spreadsheets or a lack of any digital process whatsoever beyond emailing PDFs, right. So there's a lot of greenfield opportunity here in addition to kind of just flipping existing customers off of legacy systems or consolidating their systems. So there is a very robust long tail of growth here that's going to go on for years. That's why it's so exciting to see all the activity in this space because it's going to take a village to deal with digitize this entire market, and we're at the very, very early stages of this, which is great. Jason Celino: Great. Appreciate the color. Thank you. Operator: Thank you. Our next question comes from the line of Gal Munda from Berenberg. Your line is now open. Gal Munda: Hi Andrew, hi Debbie and the team. Thanks for taking my questions. The first one, Andrew, maybe just a little bit on construction, new construction portfolio is really expanded and inspired very strong now. I'm just wondering, how should we think about the individual brands that you acquired between PlanGrid, Assemble, BuildingConnected, Pype on one side and then Autodesk Construction Cloud on the other side, in terms of user adoption. And do you see users that came in for individual brands now starting to kind of move towards the platform approach as well? Andrew Anagnost: Yes. Excellent question, Gal. As you know, Gal, Autodesk Build and the Construction Cloud in general is the unification of all those brands and it's where we leave with new customers. Absolutely, when we're going out there chasing new businesses, Autodesk Build, it's all the capabilities that are built into Autodesk Build, it’s Autodesk Takeoff, it’s all of those tools associated with the Construction Cloud and that's where we lead. But we're also seeing people migrate off of the individual brands and move forward, all right. So we're seeing the same kind of thing happening incrementally. But that's not – we're going to let those people move at their own pace, right. So when they're choosing to move on to the consolidated cloud, they're doing that by choice. And as part of a process over time, we will ultimately migrate all of them to Construction Cloud and Autodesk Build. But right now, we're leading it with our new customers of Autodesk Build and helping customers consolidate on the Autodesk Build when they want to bring some of those old brands along with them. But all the best technology from all those brands is in the Construction Cloud now. Gal Munda: Understood. Thank you. And maybe Debbie, just another question for you. I completely understand the Q1 is the smallest quarter in terms of new business generation and in terms of the as well. So what I wanted to touch though so might not have been a good time to kind of organically think about raising the guidance for the year so early in the year. I'd like to just kind of take a step back and think about what happened during Q1 and what you're seeing so far in Q2. If that kind of a level of trading and recovery continues, we decide to say that you feel pretty confident about your full-year guidance then? Debbie Clifford: I mean, we issued the guidance today that we feel comfortable with. And I would say that we certainly have a strong sense of optimism based on the results that we had in Q1, but it's just too early for us to change the underlying view on a year after only one quarter, but we're off to a good start. Gal Munda: Got you. Thank you. Operator: Thank you. That is all the time we have for Q&A today. I would like to turn the call back over to Simon Mays-Smith for closing remarks. Simon Mays-Smith: Thank you, everyone for joining us. Look forward to chatting to you next quarter, updating you on our performance. If you have any questions in the meantime, please just ping me directly, happy to answer your questions. Thanks very much. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Autodesk Inc. (NASDAQ:ADSK) Faces Mixed Sentiments Amid Analysts' Ratings
- HSBC downgrades Autodesk Inc. (NASDAQ:ADSK) from "Buy" to "Hold" due to valuation and growth concerns.
- Citi raises its price target for Autodesk to $361, highlighting the company's strong third-quarter billings as a sign of healthy revenue collection.
- Autodesk's third-quarter results present a mixed bag, with uncertainty around fiscal year 2026 free cash flow targets and varied reactions to the new CFO appointment.
Autodesk Inc. (NASDAQ:ADSK) is a leading software company known for its design and engineering software, primarily used in architecture, engineering, construction, manufacturing, and media industries. The company faces competition from firms like Adobe and Dassault Systèmes. Recently, HSBC downgraded Autodesk from a "Buy" to a "Hold" rating, citing concerns about valuation and growth moderation. At the time, the stock price was around $291.98.
Despite HSBC's downgrade, Citi has shown confidence in Autodesk by raising its price target from $358 to $361 while maintaining a "Buy" rating. This decision comes after Autodesk's strong third-quarter performance, particularly in billings, which indicates healthy revenue collection. Citi's analyst views the recent dip in Autodesk's share price as a potential buying opportunity.
Autodesk's third-quarter results have been a mixed bag for investors. While the company has outperformed its peers in estimate revisions, there is some uncertainty regarding its fiscal year 2026 free cash flow targets. Additionally, the appointment of Janesh Moorjani as the new CFO has received varied reactions from investors, adding to the mixed sentiment.
Currently, Autodesk's stock is trading at $291.90, showing a slight increase of $1.26 or 0.43%. The stock has fluctuated between $289.03 and $292.62 today. Over the past year, it has seen a high of $326.62 and a low of $195.32, reflecting its volatility. Autodesk's market capitalization stands at approximately $62.76 billion, with a trading volume of 1,317,326 shares on the NASDAQ exchange.
Autodesk Shares Drop 7% Despite Narrow Q3 Earnings Beat and Revenue Growth
Autodesk (NASDAQ:ADSK) saw its shares decline by more than 7% in pre-market today after reporting third-quarter results that slightly exceeded expectations but failed to impress investors.
For the third quarter of fiscal 2025, the design software company posted adjusted earnings per share of $2.17, beating the Street consensus estimate of $2.12. Revenue rose 11% year-over-year to $1.57 billion, marginally surpassing analyst projections of $1.56 billion.
Autodesk issued mixed guidance for the fourth quarter. The company projected adjusted EPS in the range of $2.10 to $2.16, aligning closely with analyst expectations of $2.12. Revenue guidance of $1.623 billion to $1.638 billion placed the midpoint slightly above the consensus estimate of $1.62 billion.
The company faced headwinds, with its GAAP operating margin dropping by two percentage points to 22% and its non-GAAP operating margin declining by three percentage points to 36%. Autodesk's net revenue retention rate stayed within the 100% to 110% range on a constant currency basis, reflecting steady performance in retaining customers.
Autodesk, Inc. (NASDAQ:ADSK) Sees Positive Analyst Sentiment and Growth Potential
- Analysts have raised the consensus price target for Autodesk, indicating a positive outlook on the company's future performance.
- The transition to a subscription model is expected to provide long-term stability for Autodesk, despite short-term cash flow impacts.
- Activist investor Starboard Value's involvement suggests potential operational enhancements and increased shareholder value, leveraging Autodesk's strong market position.
Autodesk, Inc. (NASDAQ:ADSK) is a leading software company known for its 3D design, engineering, and entertainment software and services. It serves various industries, including architecture, engineering, construction, and media. Autodesk competes with companies like Adobe and Dassault Systèmes. The company is transitioning to a subscription model, which is expected to provide long-term stability.
The consensus price target for Autodesk has shown a notable upward trend over the past year. Last month, the average price target was $330, indicating positive sentiment among analysts. This suggests potential growth and confidence in Autodesk's future performance. The stock price has increased by 27% year-to-date, reflecting this optimism.
Three months ago, the average price target was $300.62, marking a significant increase of nearly $30 in just a quarter. This reflects growing optimism about Autodesk's prospects. However, the company's stretched valuation and challenges from maintenance revenues and competition have caused some investors to remain cautious.
A year ago, the average price target stood at $287.59. Over the past year, the consensus price target has increased by approximately $42.41. Analyst Matthew Hedberg from RBC Capital has set a price target of $295, indicating confidence in Autodesk's potential to surpass quarterly earnings estimates.
Autodesk's transition to a subscription model and recent billing changes have impacted short-term cash flow. However, these changes are expected to provide long-term growth potential. Activist investor Starboard Value is pressuring Autodesk to enhance operations and increase shareholder value, highlighting the company's strong market position and potential in generative AI.
Autodesk, Inc. (NASDAQ:ADSK) Quarterly Earnings Preview
- Analysts predict an EPS of $2.12, indicating a year-over-year increase of 1.9%.
- Projected revenue for the quarter is approximately $1.56 billion, a 10.5% increase from the previous year.
- Financial ratios such as a P/E ratio of 64.45 and a debt-to-equity ratio of 0.95 highlight Autodesk's market valuation and financial stability.
Autodesk, Inc. (NASDAQ:ADSK) is a leading software company known for its design and engineering software, widely used in industries like architecture, construction, and manufacturing. As it prepares to release its quarterly earnings on November 26, 2024, analysts are closely watching its financial performance. Autodesk competes with companies like Adobe and Dassault Systèmes in the software industry.
Wall Street analysts estimate Autodesk's earnings per share (EPS) to be $2.12 for the upcoming quarter. However, the company is expected to report an EPS of $2.11, reflecting a year-over-year increase of 1.9%. This slight difference in estimates highlights the importance of accurate earnings projections, as changes can significantly impact investor reactions, as highlighted by empirical studies.
Autodesk's projected revenue for the quarter is approximately $1.56 billion, marking a 10.5% increase compared to the same quarter last year. This growth indicates strong performance in its core markets. The company's price-to-sales ratio of 11.70 suggests that the market values Autodesk at nearly 12 times its annual sales, reflecting investor confidence in its revenue-generating capabilities.
Despite a high price-to-earnings (P/E) ratio of 64.45, Autodesk's earnings yield stands at 1.55%, providing a measure of return on investment. The enterprise value to sales ratio is slightly higher at 11.89, indicating the company's total valuation in relation to its sales. These metrics suggest that investors are optimistic about Autodesk's future growth prospects.
Autodesk's debt-to-equity ratio of 0.95 shows it has slightly less debt than equity, which is a positive sign for financial stability. However, the current ratio of 0.64 suggests potential challenges in covering short-term liabilities with short-term assets. This could be a point of concern for investors, as it may impact the company's liquidity position.
Morgan Stanley Reiterates Overweight on Autodesk, Raises Conviction in EPS Growth
Morgan Stanley analysts reiterated an Overweight rating on Autodesk (NASDAQ:ADSK) with a price target of $320 on the stock.
The analysts emphasized that Autodesk is Morgan Stanley's top pick, highlighting the company's potential for margin and EPS growth. Autodesk's shares are currently trading at a discount compared to both design software and larger software peers, despite improving fundamentals in areas such as free cash flow, revenue growth, and operating margins.
Following Autodesk's Q2 2025 results, where management emphasized their industry-leading GAAP margins, the analysts conducted an in-depth analysis of the company’s path to further margin expansion, go-to-market optimizations, and the impact of its new transaction model. The analysts believe these factors will drive EPS growth and position the company for multiple expansion, further solidifying Autodesk's strong risk/reward profile.
Deutsche Bank Adjusts Autodesk Inc. Rating to "Hold"
- Autodesk's quarterly earnings for April 2024 showed a revenue of $1.42 billion, an 11.7% increase year-over-year, and an EPS rise to $1.87 from $1.55, surpassing Wall Street expectations.
- The company has consistently outperformed consensus revenue and EPS estimates over the last four quarters, indicating strong financial resilience and operational efficiency.
- Autodesk's focus on 3D AI technology and generative design technologies, along with its significant increase in remaining performance obligations, positions it well for future industry advancements.
Deutsche Bank's recent adjustment of its stance on Autodesk Inc. (NASDAQ:ADSK) to a "Hold" rating, as reported by StreetInsider, reflects a cautious yet observant perspective on the company's future performance. Autodesk, a leader in 3D design, engineering, and entertainment software, has shown a consistent ability to innovate and adapt to the evolving demands of the digital world. This adjustment comes at a time when Autodesk reported a notable increase in its quarterly earnings, showcasing the company's financial health and growth trajectory.
Autodesk's earnings for the quarter ending April 2024 were impressive, with revenue of $1.42 billion, marking an 11.7% increase over the previous year. This growth in revenue is a testament to Autodesk's strong market position and its ability to capitalize on the increasing demand for its software solutions. The company's earnings per share (EPS) also saw a significant rise to $1.87, up from $1.55 in the year-ago quarter, surpassing Wall Street expectations. Such financial metrics are crucial indicators of Autodesk's robust performance and its potential for sustained growth.
The company's ability to exceed analyst predictions, with both revenue and EPS beating the Zacks Consensus Estimate, underscores its operational efficiency and strategic initiatives. Autodesk has consistently outperformed consensus revenue and EPS estimates over the last four quarters, highlighting its financial resilience and the effectiveness of its business model. This trend of surpassing expectations is a positive signal for investors, indicating Autodesk's strong execution and potential for future success.
Operating within the competitive computer software industry, Autodesk's latest financial achievements demonstrate its sustained growth and ability to exceed market expectations. The company's focus on 3D AI technology and generative design technologies positions it well for future advancements in the industry. Autodesk's significant increase in its remaining performance obligations and its leadership in developing industry clouds and platforms for 3D AI products and services further solidify its market position.
Despite the recent decrease in its stock price, Autodesk's financial performance and strategic advancements indicate a promising outlook. The company's market capitalization and trading volume reflect its significance in the industry and investor interest in its growth potential. As Autodesk continues to innovate and expand its offerings, it remains a key player in the software industry, poised for continued success.
Autodesk, Inc. Quarterly Earnings Preview
- Anticipated Earnings Report: Autodesk is expected to release its quarterly earnings on Thursday, June 13, 2024, with an EPS of $1.8 and projected revenue of $1.4 billion.
- Q1 Performance: Autodesk reported Q1 revenue of $1.42 billion, an 11.7% increase year-over-year, surpassing both revenue and EPS estimates.
- Market Position and Innovation: The company's focus on 3D AI and industry clouds has strengthened its market position, reflected in its stock performance and market capitalization of approximately $45.57 billion.
Autodesk, Inc. (NASDAQ:ADSK) is gearing up to release its quarterly earnings report on Thursday, June 13, 2024, after the market closes. The anticipation among investors and analysts is palpable, with Wall Street setting its sights on an earnings per share (EPS) of $1.8 and projecting the company's revenue for the quarter to be around $1.4 billion. Autodesk, a leader in 3D design, engineering, and entertainment software, has consistently demonstrated its ability to meet and exceed market expectations, making this upcoming earnings report a significant event for stakeholders.
In the first quarter ended April 2024, Autodesk reported revenue of $1.42 billion, marking an 11.7% increase over the same period last year. This performance not only surpassed the Zacks Consensus Estimate of $1.4 billion by a margin of 1.46% but also exceeded the anticipated EPS, coming in at $1.87 compared to the forecasted $1.78. This indicates robust financial health and operational efficiency, as the company managed to outperform analyst estimates on both top and bottom lines, a trend that investors hope will continue in the upcoming earnings report.
Autodesk's ability to consistently surpass expectations is a testament to its strong position within the Zacks Computer Software industry. The company's focus on innovation, particularly in 3D AI and industry clouds, has allowed it to maintain a competitive edge and sustain its growth trajectory. With a reported 12 percent increase in first-quarter revenue and a 12 percent year-over-year increase in current remaining performance obligations, Autodesk's strategic advancements in technology and business model evolution are clearly paying off.
The company's stock performance reflects its operational success, despite the fluctuations in the market. Currently trading at $211.5, Autodesk has seen its shares fluctuate between highs and lows, yet maintains a solid market capitalization of approximately $45.57 billion. This resilience in the stock market, coupled with the company's consistent financial performance, makes Autodesk a noteworthy entity in the eyes of investors and industry observers alike.
As the date of the earnings report approaches, all eyes will be on Autodesk to see if it can continue its streak of exceeding market expectations. The company's previous performance, characterized by significant growth in revenue and EPS, sets a high bar for the upcoming quarter. Investors and analysts alike will be keenly watching to see if Autodesk can maintain its momentum and further solidify its position as a leader in the software industry.
