Autodesk, Inc. (ADSK) on Q2 2021 Results - Earnings Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. And welcome to the Autodesk Second Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference to your speaker today, Abhey Lamba, VP, Investor Relations. Please go ahead, sir. Abhey Lamba: Thanks, operator. And good afternoon. Thank you for joining our conference call to discuss the results of our second quarter of fiscal year 2021. On the line is Andrew Anagnost, our CEO, and Scott Herren, our CFO. 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, 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 for important risks and other factors including developments in the COVID 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 the press release or the slide presentation on our investor relations website. And now, I would like to turn the call over to Andrew. Andrew Anagnost: Thank you, Abhey. To start, I hope everyone is safe and healthy as our world continues to be impacted by the COVID pandemic. Our priorities remain the safety and well-being of our employees, and the continued support of our customers, partners and communities. Before I dive into the quarter, I thank all of our employees for their efforts and persistence during these challenging times. The resiliency of our business model and solid execution helped us deliver strong Q2 results with revenue, earnings and free cash flow above expectations, even as we continue to operate in uncertain times. The secular trends that we have been investing in and preparing for, such as the adoption of cloud-based solutions, are accelerating and we are excited about our position in the market. While our competitors are just beginning to focus on similar trends, our investments from the last few years are already driving positive results. With the business model changes we have made, we continue to deliver significant value and functionality in the cloud. Because of this, and a few other aspects I'll discuss, we will be stronger on the other side of this pandemic. As indicated on the last call, we continue to closely monitor the usage patterns of our products across the globe, something we could not do historically. In China, Korea, and Japan, we are seeing usage above pre-COVID levels. In some areas of Europe, we continue to see a recovery as well. In the Americas, we experienced a slight uptick in usage for most key products in July. We are also seeing a positive correlation between usage trends and new business performance, which gives us confidence that the green shoots we see in usage will translate to improved new business performance in subsequent quarters. In all senses, work is changing, and our cloud collaboration products effectively connect project teams and workflows allowing businesses to thrive even when their employees and partners are working remotely. Usage of BIM 360 Design, our cloud collaboration tool, has accelerated with the adoption by Revit users almost doubling in the past year. We also continued to gain momentum in manufacturing with Fusion 360. We had the best quarter ever for subscription net additions with more than 10,000 in the quarter. The value of the cloud is becoming more and more apparent and cloud-based solutions are becoming a necessity. Our product subscription renewal rates improved steadily throughout Q2 as customers recognize the critical value our offerings bring to their businesses. Our new business was impacted by the current environment, but the strength of our pipeline entering the second half of the year, combined with execution in recovering countries, make us confident in our full-year targets. Now, I'd like to turn it over to Scott to take you through details of our quarterly performance and guidance for the year before I come back to provide insights into our strategic growth drivers. Scott Herren: Thanks, Andrew. As you just heard, despite facing the economic headwinds from COVID, we had strong performance across all key metrics in the quarter. Total revenue growth in the quarter came in at 15% as reported, 16% at constant currency, with subscription plan revenue growing by 27% and operating margin expanding by 5 percentage points. Despite offering extended payment terms through the quarter, we delivered healthy free cash flow of $64 million. Current RPO, which reflects committed revenue for the next 12 months, is up 15% and total RPO is up 19%. Our ongoing investments in digital sales are yielding results as we saw strong double-digit billings growth through the online channel during the quarter. Our online sales are helping attract new customers to the Autodesk family, as nearly three out of four new customers in the quarter came in through e-commerce. Our run rate business came in strong during the quarter, while the pace of closing larger transactions slowed modestly. In Q2, our net revenue retention rate was within the 100% to 110% range we laid out in our previous guidance. As Andrew mentioned, we saw resilient renewal rates in the quarter. Digging deeper into our renewal rates, our product subscription renewal rates improved on a sequential basis, which is a strong endorsement of the strategic nature of our products and stickiness of our customer base in this new business model. We experienced a decline in maintenance renewal rates, as expected, since we announced the end of life of our maintenance offerings. With our transition to a subscription business model behind us, maintenance is only about 5% of our revenue. Similar to last quarter, more than 40% of the maintenance customers who came up for renewal converted to subscriptions. Our M2S revenue, combined with our maintenance revenue this quarter at $229 million, is close to 80% of our peak quarterly maintenance revenue in Q1 fiscal 2016. This speaks to the great success we have had with the program. In Q2, we also saw industry collections grow sequentially as a share of total new business. While multi-year payments are down year-over-year, toward the end of the second quarter, we saw a slight uptick in multi-year payments as customers continue to make long-term commitments to our products. APAC led the way in share of multi-year deals, consistent with the region's relatively strong performance in new business. As we anticipated, our second quarter new business activity was more impacted than in Q1, with new business declining in the range of mid-teens percent. In line with our commentary on the last call, we think the second quarter will be the most impacted by the pandemic. Our business is recovering in the markets that were impacted by the pandemic earlier on. However, some of our major markets like the US and UK have stabilized, but are yet to show meaningful improvement. As such, we continue with a wider-than-normal revenue range for the remainder of the year, while raising the midpoint of our guidance. Our updated guidance implies continued improvement in all of our end markets over the next two quarters and we expect the pace of closing larger transactions to improve. In addition to the impact of large deal activity, the range of our forecast factors in varying degrees of demand environment in the Americas, which includes our largest end market. At the upper end of our guidance range, we are modeling meaningful recovery in the region in the third quarter, with continued improvement in the fourth quarter. At the low end of the range, we anticipate a slower recovery in the third quarter and improvement in Q4. We are very pleased with the performance of our product subscription renewal rates in the second quarter and expect them to continue improving for the rest of the year. For the remaining maintenance base, we expect churn to further increase, but recall that we are in the final stages of ending our maintenance offering and the number of seats is small versus our total installed base. We expect our net revenue retention rate to remain between 100% and 110% for the rest of the year. Our full-year operating margin should expand by approximately 3 percentage points to 4.5 percentage points as we keep exercising our strong discipline around spend management, while continuing to invest in strategic priorities. Despite improving multi-year trends we experienced at the end of the quarter, we are taking a cautious view of their continued uptake in the second half of the year, which is impacting the upper end of our billings forecast range for the year. Our billings adjustment does not affect our free cash flow estimate of $1.3 billion to $1.4 billion for fiscal 2021 as we expect strong cash collections to continue. Finally, we are confident in our fiscal 2023 free cash flow target of $2.4 billion. And now, I'd like to turn it back to Andrew. Andrew Anagnost: Thank you, Scott. I am proud of the team for what we accomplished in Q2. With the investments we have made over the last few years and our move to make everyone a named user, we are in the final stages of becoming a true SaaS provider and delivering a significant amount of capabilities in the cloud. We can now deliver enhanced value to our users and administrators. And our named user model enables our customers to operate efficiently in a remote work environment. Our transition to named users is off to a promising start, with some customers choosing to adopt it ahead of the launch earlier this month. Khatib & Alami, one of the largest construction and engineering consulting firms in the Middle East, saw the value in its ability to accelerate work from home and reached out to transition early. The transition to the named user model is not the only thing ensuring their business continuity while working from home. During the quarter, they increased their seats of BIM 360 Design, breaking silos and enabling their building and infrastructure teams to collaborate on Revit and Civil 3D models from different locations. During the quarter, we also launched our premium subscription plan, which would not have been possible without converting everyone to named users. We can now offer added security with single sign-on capabilities, ease of administration, and advanced product usage information for administrators. One of the first to make the investment in the premium plan was one of our long-time customers, Calibre Diona, a leading provider of professional infrastructure and built-environment solutions headquartered in Australia. The most compelling features for them are the single sign-on capability and the license usage visibility. Calibre Diona has been partnering with Autodesk for 20 years, and our products have enabled them to continue innovating to deliver valuable design and engineering solutions to their customers as both CAD technology and engineering practices have evolved from the drawing board to AutoCAD and now to BIM. This next phase of our journey will enable us to offer even greater value to our customers as a true cloud technology provider. Now, let me update you on our three key growth initiatives – accelerating digitization in AEC, convergence of design and make in manufacturing, and monetization of non-compliant and legacy users. Our AEC business has continued to be resilient. Our products enable more efficient communication and increased oversight as the industry works through additional steps in their processes, such as new shift paradigms and optimized site layouts. We continue to make investments in construction where we expect technology adoption to keep growing, especially as we exit the pandemic. We recently announced three notable investments. First, we acquired Pype, which closed this month, and will add significant value for Autodesk Construction Cloud users, allowing general contractors, subcontractors and owners to automate workflows such as submittals and project closeouts to increase overall productivity and reduce risk throughout the project lifecycle. Second, we also made a strategic investment in Bridgit. Bridgit offers workforce optimization solutions for contractors. Third, we expanded our existing relationship with Factory_OS. Factory_OS is helping us improve our products to support the convergence of construction and manufacturing, thereby advancing prefabrication, off site, and modular construction practices. We continue to enhance our project and cost management capabilities by improving connected workflows and cost tracking functionality. As you may recall, a large number of construction sites had shut down when we started the quarter. Sales of our construction solutions targeted at field activities started out slowly, but improved during the quarter as construction sites began to reopen. During the quarter, Saunders Construction, a top ENR 400 provider of comprehensive construction management and general contracting services, signed a three-year renewal expansion with us, citing their previous success with our products and the ongoing value we deliver in terms of productivity gains across the project lifecycle. Saunders has been successfully using Revit in coordination with BIM 360 Field and Glue, and Navisworks for field execution, and BIM coordination for years. This enabled Saunders to centralize their document management, connect their office and field teams, build out their quality and safety programs, minimize rework, and enable company enterprise reporting. With this agreement, they're now positioned to continue growing their deployment of our construction cloud with our dedicated support and we're excited to expand our partnership with them. Our BIM 360 Design solutions continued to perform strongly throughout the quarter as architects and contractors adjusted to the remote work environment and found immense value in its cloud-based collaboration capabilities. KPF, one of the largest architecture firms in New York City, with offices and projects all over the world, is also investing in BIM 360 solutions. James Brogan, Principal at KPF, said, "At KPF, collaborating effectively with global clients and design teams is critical to our success. As such, our partnership with Autodesk and the use of BIM 360 in conjunction with Revit, in particular, have become fundamental to our business, enabling us to efficiently manage design data across global teams and deliver world-class outcomes for our clients." We continue to make progress and provide more value to customers in the infrastructure space. During the quarter, one of the largest infrastructure design firms in the US renewed and expanded their enterprise business agreement, or EBA, with Autodesk. This customer is leveraging the EBA token offering to digitize the company and move traditional file-based workflows to data-driven design, leveraging the cloud and displacing competition. With the ever-growing need to work remotely, and in large project teams with multiple stakeholders, this customer is investing in Autodesk BIM 360 as the common data platform for managing project information, collaboration, and model coordination. This design customer also added PlanGrid to manage RFIs and submittals in the field, as well as Assemble for conditioning models for estimating and quantity takeoffs. As I mentioned earlier, Fusion is continuing to accelerate within our manufacturing portfolio and gaining traction with generative design. This quarter, Firefly Aerospace, a rocket and spacecraft company based in Austin, TX, committed to Autodesk over multiple competitors as their partner of choice for design, analysis, and manufacturing software because of efficiency gains realized in their design-to-make workflows and lightweighting opportunities provided by generative design. Their first launch vehicle has been designed and built using the entirety of Autodesk's Design and Make solutions and the team at Firefly is already thinking about how generative design can be used to optimize their designs further. In a market where reduction in weight directly correlates to a reduction in cost, generative design can not only firmly establish Firefly as a thought leader in their space, but also as the most economical launch platform on the market. Leveraging these advanced tools from Autodesk will enable them to stay one step ahead of the competition. Today, we announced that our existing advanced manufacturing technologies PowerMill, PowerShape, and PowerInspect will become part of the Fusion 360 platform. This complements our existing offering of Fusion 360 with FeatureCAM for production machining applications and also allows us to bring new advanced capabilities to our core Fusion 360 cloud-based software. This is a natural progression as we see high interest from customers to use next-generation design and manufacturing workflows in Fusion 360 alongside our advanced manufacturing tools. It is also a key step toward our long-standing vision of seamless collaboration between designers and engineers, uniting design and manufacturing under the power of a single cloud platform. In Q2, we also signed a deal with Nobel Biocare, which included subscriptions to PowerMill, PowerShape, and Fusion 360 with FeatureCAM. Headquartered in Switzerland, Nobel Biocare manufactures dental implants and CAD/CAM-based individualized prosthetics, and they receive orders for custom, single and multiple-unit implant restorations from all over the world. The custom restoration is manufactured from start to finish using Autodesk software and using our technology. Nobel Biocare has created a fully automated process that allows them to produce completely unique dental restorations, meeting the individual needs of their dental patients. We are the preferred vendor for building product manufacturers who need to design within the context of the building information model. During the quarter, we signed a new enterprise business agreement with one of the largest manufacturers of exterior building products in North America. Even amid an uncertain business climate, the US-based manufacturer is strategically investing and partnering with Autodesk to support their focus on innovation and industrialized construction. They are looking to Autodesk solutions, such as BIM 360, Revit and Inventor, to help them maximize efficiencies by digitally transforming and improving processes across the entire construction ecosystem. We also displaced a local competitor at a building product manufacturer in France due to our deep connection to BIM. The convergence of design and make in manufacturing is happening and our deep connection to BIM will enable us to win. Moving on to updates on our digital transformation and progress monetizing non-compliant users. We are confident in our ability to convert the long-term opportunity. However, in the short term, we continue to be mindful of the current environment and importance of working with non-compliant users in respectful and reasonable ways. In Q2, we closed three deals of more than $1 million each in the APAC region where business activity has returned to pre-COVID levels. Also during the quarter, we closed a deal with a design-build architecture firm in China, against a local, lower-cost competitor. A few quarters ago, the customer decided to make the switch away from AutoCAD solely based on cost savings, but their engineers continued to use our software due to the necessary functionality. We were able to convert them back to paying users based on the value our solutions provide. In closing, we are building a stronger Autodesk for the long term. We have a head start over our competition in critical capabilities like cloud computing and cloud-based collaboration and we will continue to invest in our strategic initiatives. There are multiple drivers that make us confident in our fiscal 2023 targets and beyond. First, digitization in AEC is going to accelerate in the coming years as companies seek to not only make current processes more resilient and efficient, but to support new industrial paradigms for construction. Second, the evolution of manufacturing to a more distributed network and cloud-based workflow is also going to accelerate significantly over the next few years and we have the industry's leading multi-tenant cloud-based solution to address the emerging customer needs that will shape demand. And third, our business model is more robust, adaptable and resilient than in the entire history of the company. This will allow us to not only invest in the future, but to do so with an eye to both revenue and margin growth. With that, operator, we'd now like to open the call up for questions. Operator: Thank you. [Operator Instructions]. Our first question comes from Saket Kalia with Barclays. Saket Kalia: Hey, Scott, maybe for you. Can you just talk about what you're seeing on customer preferences for different duration contracts? You touched on this a little bit in prepared remarks, but can you just talk about what you saw in terms of contract duration this quarter and how you're planning for that the rest of the year as we think about that change to the top end of the billings guide? Scott Herren: You're spot on. And we said coming into the quarter, when we gave the previous guide, that we felt Q2 would be the toughest quarter of the year. And in particular, we thought we would see an impact on multi-year, and we've seen that at the very end of Q1. And we did see that. We saw an impact, although it didn't – the rate of customers buying multi-year didn't fall through the floor by any stretch, but it came down earlier in the quarter. And then, as the quarter went on, we saw it modestly improving each month throughout the quarter. So, the multi-year did take a hit and then improved throughout the quarter. But with that said, remember, when we rolled out that guidance and we described it, I think, in quite a bit of detail what would take us to the high end of the range versus the low end. And at the high end of the guidance ranges, we had assumed a swift recovery in the second half of the year. And that's exactly what we're seeing in some markets, but not in all of our markets. So, the adjustment in the billings guide is really driven by our expectation of less multi-year sales and a slightly slower recovery in the US and UK, as we talked about on the opening commentary. Saket Kalia: Maybe for you, Andrew, for my follow up. A little bit sort of disconnected from the results a little bit. But you posted an interesting blog a couple weeks ago about Autodesk in the AEC industry. And I guess I just want to zero in on one part of it, which was the idea that architectural customers – you spent a lot of time, by the way, in your prepared remarks – may actually be paying less under the subscription model versus the old perpetual maintenance model. And so, I was just wondering if you could expand on that a little bit. And maybe address whether Autodesk is actually potentially leaving money on the table in the AEC industry. Andrew Anagnost: Thanks for proving to me why this audience won't be as empathetic to some of those concerns that were expressed as other audiences. So, first off, let me just acknowledge something about the communications with the AEC industry, and the architects in particular. One, they have legitimate concerns about the functionality in Revit. And we take those incredibly seriously. And the fact is, is that from an architectural standpoint, Revit hasn't gotten a lot of incremental investment, a lot of the AEC investments have gone to construction, it's gone to revenue enhancements targeting the engineering component, the workflow – structural workflows, in particular. So, there's some real legitimate concerns there. The other concern they have is the move from multiuser to named users. These are large multi-user clients and they've seen multi-user prices drift up. They really want a pay per use model. We want them to have a pay per use model, which they would prefer to a cloud licensing. So, those are some things I just want to make sure that we acknowledge. And we're all on the same page with. But that said, like you said, and it was important that I make this clear, these customers come from a highly privileged, roughly 20% of our subscription base that moved from maintenance to subscription and have really pretty deep price protections, okay, relative to the rest of the base. And if you look at their expenditures over a five-year period, frankly, even over – moving out another five years, as they add seats, they are actually paying less to Autodesk than they would have under the old perpetual model. And that was a deliberate part of the transition, even as multiuser prices go up in everything. If you add up what they would have paid for us for adding users over time, they actually end up paying less over a five-year period and, frankly, as they add users over a 10-year period. We're not concerned about that. We went out very early on that we were going to take care of these maintenance customers that were out in front of us. We did that. Lots of debates with all of you about the maintenance subscription program and 10-year price lock. It wasn't exactly something that all of you were behind. Alright? But we think it was right. And yes, it has resulted in this. So, we're never going to be on the same page with this audience about that particular part of the equation. But remember, this is a shrinking bit of our subscription base, the protected 20% now. There'll be less than that later. But, over time, they pay less than they used to in the old perpetual model. It's true. But we're not worried about that. There's no concern there. Operator: Our next question comes from Jay Vleeschhouwer with Griffin Securities. Jay Vleeschhouwer: Question number one, Andrew, is about the intersection of what you've called three inevitabilities or eventualities in your business. Number one, collections in the cloud. Two, a consumption model. And then, three, an underlying rearchitecting of your platform. The product information model or whatever you're going to be calling it now, you are doing that underlying rearchitecting work. And so, in terms of connecting all of those things, how feasible or desirable might it be for you to re-segment the portfolio, not to go back to where you were pre-transition in terms of having dozens of SKUs and so forth, but perhaps you would have the opportunity to have some additional number of flavors, either standalone or perhaps new collections, configurations that you would be able to feasibly bring to market based on the new architecture, named user and so forth. So, the follow-up question. At the analyst meeting two months ago, you talked about your customer breakdown as consisting of named account, mid markets, strategic territory and plain vanilla territory. The question there is, could you talk about the performance in each of those four segments and how you're thinking about those for the remainder of the year and whether you're doing anything in terms of sales capacity and/or back-end margins? Thanks. Andrew Anagnost: So, I'm going to take the first part of that, and I'm going to hand the second part of that to Scott. Right? So, Jay, you asked a very complicated, sophisticated question there. But let me kind of summarize it this way, right? The model that we're going to is a greater segmentation in some respects, but I want to keep pointing you back to the way Fusion is being architected and constructed. All right? Fusion has a subscription entry price. There's a set of functionality that people use frequently and that they're using to do a lot of their day to day work, but then there's a series of modules that they can reach out to and access on a need-based method. Okay? And you just noticed we added more of those recently to Fusion, from technology that was previously in the Delcam portfolio. This model of having a, for the lack of a better word, a vertical platform that's, for instance, in manufacturing, it's built on the product information model in the cloud; in AEC, it's going to be built on a building information model in the cloud; in media, it might be built on a media information model in the cloud and things associated with that. They will be able to pull the functionality they need as they need it. They'll pay a baseline subscription, and they'll pay per use for various things as they need them and as they need some of this advanced capability. So, if you think about it, is that a segmentation of our portfolio and an increase of SKUs? Maybe in some respects, but what it's designed to do is ensure that occasionally used functionalities of high value, they can get when they need it without having to get it all at once. That's the notion of collections in the cloud. It's collection in the cloud that they can use on an as-needed basis. So, when you look at what we're doing with Fusion, that really directionally captures where the model is going for all of our customers, ultimately. And it's all connected. You're right. Named user, necessary to do that because you have to name the user, so that you can track their usage and their needs and provide something to them specifically. That doesn't mean the named user can't be a large pool of named users that come in occasionally, which is something that people want in terms of consumption and pay per use, but it's also connected right back again to the underlying architecture of the products. And that's the future we're going to. Scott, off to you. Scott Herren: Jay, let me let me take your question from the bottom up. If we start with territory – strategic territory, which tends to be our smaller accounts. It was actually quite strong. And we touched on this kind of qualitatively in the opening commentary. We saw good strength in that small customer set. And more so if you – instead of slicing it by customer size, slice it by geo, you can see the result. APAC was quite strong where we've seen the pandemic at first. They went through what they went through. As those markets reopened, we called out China, Korea and Japan as actually being above pre-COVID levels. So, seeing good strength in the smaller accounts and seeing good strength in APAC and then subsequently in continental Europe. As you work your way up to mid-market and name, name, it doesn't have a big Q2. That's where most of our EBAs sit. That's where all of our EBAs sit is in the name user – or I'm sorry, in the named account category. And that seems to be heavier in the second half of the year. So, we've actually got a very full pipeline of large transactions, large accounts, EBA renewals that are coming up. And those EBAs have close to 100% renewal rate. So, named did fine during the quarter, but Q2 is not a big quarter for named accounts. And mid-market was a little bit more tepid. And what I'd say there is, we had a lot of multi-user usage within the mid-market. And you've seen what we've done with the transition to named, moving away from multi-user and over to named. We didn't actually have that offer, that two for one offer active until the beginning of Q3. So, there's little bit of a pause in the mid-market as many of those mid-market accounts, by the way, doing what all of us are doing, kind of assessing their business and understanding their needs, but also had the impact of wanting to get to the transition to named program that we launched at the beginning of Q3. That's the right way to think about it by customer size. Operator: The next question comes from Matt Hedberg with RBC Capital Markets. Matthew Hedberg: Congrats on the results and really good to hear the strength in the renewal business. I guess, for either of you, maybe Scott, outside of the trends in multi-year that you alluded to in your answer to Saket's question earlier, I'm wondering if you could talk in a little bit more detail about how new business trends have progressed through the quarter? And maybe how August has trended versus last year? I know Andrew mentioned strengthened pipeline. Just wondering on that new business side, what gives you confidence there? Scott Herren: I'll start on that, Andrew, and let you jump in and add some more color. What we saw in the new businesses is really in line with what our expectations were in those markets that have opened up. So, slice it first by geo, Matt. When you look at it by geo, APAC new business rates were the highest. Continental Europe, think about the way that the pandemic struck Continental Europe. Next, and the US and the UK, by the way, outside of Continental Europe, both feeling like they've stabilized. There's no further declines. And we see modest bump up, modest bump down. I'd say they're more stable than they are coming back out of it yet in those two markets. So, new business has kind of followed those trends. Andrew talked about their usage rates and we've been monitoring those usage rates around the world. And what we see is, as the usage rates come back, as the markets reopen, we see the new business come back at the same time. So, that's probably the right overall characterization for it. Andrew, anything you'd add to that? Andrew Anagnost: The correlation between usage rates and then ultimate new business, it's proving out to be fairly tight. So, we expect to see that continue. We saw it in APAC. We watched go up. We're seeing it in Europe. Like we said earlier, we're seeing stability in the US and the UK. And we expect that, as that moves from stability to rising, we're going to see the same kind of uptick in new business. The two seem to be correlating quite well. Matthew Hedberg: And then, AutoCAD and AutoCAD LT, I think they grew 18% in the quarter. Wonder if you can talk a bit more granularity about AutoCAD LT. I know that has actually been fairly strong for you thus far. And I know, historically, had been weaker in times of stress. Just Wondering how LT is holding up relatively in this market. Andrew Anagnost: We used to talk about that as the canary in the coal mine for market dislocation at the low end. But subscription changes everything. The subscription price point for LT is a very attractive price point. And most of the customers that are buying it are very small businesses, small or very small, medium businesses. And it does what they need. So, they continue to buy in the space. People buy AutoCAD for the 3D and the APIs and the things that go associated with that. But the price point of LT has actually proven to be very attractive and very resilient during this time. And it's just one of the fundamental changes in the subscription model. Operator: Our next question comes from Brad Zelnick with Credit Suisse. Brad Zelnick: Andrew, I wanted to dig into manufacturing a bit more. The segment only grew 6% this quarter despite all of the good things happening with the convergence of design and make. Is there anything in particular that you'd call out as having a more pronounced impact in manufacturing? Andrew Anagnost: Actually, we're growing faster than our biggest competitor in the space. So, I just want to make sure we get that in. Look, the space is doing well. Remember, we continued to grow strong last year. So, we had good strong growth coming into last year and next year. So, we're comparing 6% to a good year last year, not 6% to a bad year last year or something like that. So, we're actually happy with the performance we're seeing right now. And I think that's an important metric for us, especially what you see going on with regards to Fusion and the net adds around Fusion. So, we view this as a solid result, and it's only going to continue to get better. So, I think we're in a good position right now. Especially when you look at what we're comparing to from last year. Brad Zelnick: That's fair. And maybe just in follow-up, can you talk about the strong performance of ecommerce channel? Are you seeing changes in the types of products customers are purchasing through this channel? And does this in any way change how you're thinking about the direct business longer term? Andrew Anagnost: It doesn't fundamentally change our strategy. We're still trying to get that that digital direct online business up to 25% of our total business. So, our strategy hasn't fundamentally changed. The product mix does change a little bit. All right? They are buying additional products on this channel. But fundamentally, our strategy hasn't changed. But it has, obviously, held up incredibly well during this and customers have continued to buy. But the strategy, the fundamental strategy of where we're going and what we're trying to do, we want everything we sell available on the channel. And our goal is still to get it up to 25%. Operator: Our next question comes from Phil Winslow with Wells Fargo. Philip Winslow: Congrats on another strong quarter. I just want to focus in on AEC again. Obviously, you mentioned some of the slow starts or positive in projects at the beginning of the quarter. But if I look at your comments, you talked about competitive wins in project management in your 360. design uptake. Wondering if you could talk about just the puts and takes that you're seeing in the AEC vertical and how are you thinking about those as we go into the second half? Thanks. Andrew Anagnost: The total business grew fairly well. All right? And I think we just want to make sure that we zero in on the things that are soft and the things that aren't. Let's talk specifically about construction. As I said in the opening commentary, the field area is where we see the softness. And right now, it's stabilizing and we expect to see field usage going up. And that's to be expected, given everything that happened with construction sites. But where we're seeing strength, and this is an important precursor to future business, right, because it's upfront in the process, is BIM 360 design and doc, which are part of the pipeline of loading the project flow. So, BIM 360 design, doc in particular, has seen robust growth during this entire period in the construction segment. Obviously, Revit continues to do well in this segment in terms of BIM in general doing well. So, I want to make sure that we pay attention to – the softness is really in the places where the hammers are hitting the wood or hitting the metal, depending on what you're building or the concrete is being poured. And it's not in the upfront part of the project and the project management, which is great for us, because we're bringing more people into the pipeline. And if all we were doing was being narrowly focused on the execution part, we would certainly be in deeper problems than we are right now in the field execution side. We have a broad portfolio that goes all the way from design through to pre-construction planning, and that part is continuing to see robust action. Operator: Our next question comes from Koji Ikeda with Oppenheimer. Koji Ikeda: Great quarter. Had a question on the Pype acquisition. Congrats on that acquisition. We've actually heard really great things about Pype technology out in the field. And my question is about the technology and the workflows that it will enhance in the construction cloud, really balancing against any potential overlap with other products within the construction cloud. So, I guess, from a high level, what are the key construction workflow enhancements coming from the Pype acquisition? And are there any technology overlaps with existing products? Thank you. Andrew Anagnost: Obviously, Pype's in the project management area. And one of the key things it adds is a machine learning layer to the whole process of setting up and managing changes and requests and work orders in the process. Okay? So, what it's doing is it's shortening the time to work these close outs and these project activities upfront in the process. So, it's giving us technology that provides for faster turnaround, better project management, lower risk and better outcomes. That's really what it's doing. We certainly have some of these capabilities inside the core portfolio, but nothing as deep as what Pype has. Pype went a lot more deeply into the workflow and covers a lot more use cases than we do. And as you know, we were partnered with them throughout the process and we have lots of accounts where we were in there, Pype was in there and we worked really very closely with them to make sure that we were complementing our RFI workflows and not duplicating them. So, their whole process takes the RFI and similar workflow to a whole new level. And it's a pretty powerful combination for us. And like you said, our customers were pretty bullish on the technology as well, which is one of the reasons why we were bullish. Koji Ikeda: And just maybe one follow-up on the big deals in Asia. Congrats again on the three big license compliance deals of over a million. Great news there. I guess, could you tell us maybe what the average contract duration was for those deals? And could you remind us, how does that deal type volume compare to prior periods, the three license deals? And I guess, really, from a big picture perspective, how many of these 1 million plus license compliance deals are out there in the world today? Thanks again for taking my questions. Scott Herren: The reason for calling out those deals is not that they were particularly notable in terms of duration, et cetera. It's more to give you a sense of – we've talked about – out of deference to our customers and the position that many are put in in this economic environment, continuing to work the back end and drive the demand for our license compliance business, but to go a little bit more slowly at a time when markets are and our customers are under particular levels of stress. As we've seen those markets open back up, the reason to call out those is not only are they large, but they're also in markets that have recovered and that we are seeing come back. And as they do, we're getting right back on the – ensuring that we can monetize those non-compliant users. So, that was the purpose of calling them out, much more so than saying they were particularly lengthy in duration. Operator: Our next question comes from Adam Borg with Stifel. Adam Borg: I just had two quick ones. I guess first, just building off Matt's question earlier around AutoCAD LT, obviously, you mentioned the strength in AutoCAD LT given the price points. I just wanted to drill in. Are you seeing any customers optimize purchases? You talked about that last quarter. So, any trade-downs from either AutoCAD or industry collections? Any commentary there would be great. And just as a quick follow-up, just want to talk about partial renewal rates. I know you've talked about renewal rates being in line with expectations, but just any commentary around the partial renewal activity would be great. Andrew Anagnost: I'll take the AutoCAD question And I'll hand the renewal rate question over to Scott. So, actually, we're not seeing that kind of behavior. What we're seeing is growth in all of these segments independent of each other. So, we're seeing customers sticking with collection. We're seeing customers buying AutoCAD for the first time. We're seeing customers buying LT for the first time. We're not seeing a lot of cross flow between the two. But remember, as time goes on, AutoCAD does get squeezed between collections and LT over the long period. And we expect that. That's something that we plan for, that we expect, we model. At some point, the AutoCAD as it is today gets squeezed between those two types of offerings. But right now, we're not seeing trade-up or trade-down. We're seeing people staying within the offerings they have, buying more of the offering they have and adding up in that respect. So, Scott, to the partial renewals. Scott Herren: Just to put a finer point on what you just said, Andrew, if you look at our product mix in terms of the percent of sales that are LT versus AutoCAD versus collections and other, it's kind of reverted to its historical mean. So, we're not seeing a big shift between in product mix. To your question on partial renewals, we continue to obviously to monitor that closely because it's a good indicator of how are the – what's the employment health of our customers, right? So, a partial renewal is, I had 10 subscriptions, they all came due at the same point. But instead of renewing 10, I only renewed 9 or I renewed 8, right? And it gives us a sense of changes in their headcount. There's always a certain amount of that that happens in any given quarter. And what we talked about last quarter is we've monitored the rate of those as they come up, what percent of them are doing a partial renewal, and it really hadn't moved last quarter. And it's really materially the same again this quarter. So, we're not seeing a big change either up or down. I wouldn't expect it to go down from the base rate, but we're not seeing it increase from that base rate. Operator: Our next question comes from Keith Weiss with Morgan Stanley. Hamza Fodderwala: This is Hamza Fodderwala in for Keith Weiss. Andrew, I was hoping if you could give like an updated breakdown of the business between infrastructure, commercial, industrial construction. You talked a lot about industrial. Clearly, the macro seems to be rebounding. But we're still hearing a lot of uncertainty around the commercial segment. I think in the past, people have thought that Autodesk is quite tied to the commercial side. But, clearly, there's good growth in the other segments. So, I was wondering if you could give any view on your exposure through those three verticals and how you're seeing the macro in each of those? Andrew Anagnost: We're not seeing any slowdown in our AEC business due to commercial dislocations that might be going on in various places right now. So, we talked about that a lot. Because there was this assumption that somehow commercial, especially commercial office buildings in urban areas are like a big part of our business. They're not, all right? And we're still kind of seeing strength in the AEC business outside of that. But I want to make sure we understand what's really happening in commercial right now. All right? Big urban projects are probably – either probably going to slow down or not be as frequent. However, what is happening in urban locations, there's still going to be a lot of reconfiguring work in commercial space. But also one of the things that that we're going to be seeing, and you can see this in some of some of the political discussions as well as some of the business discussions we're having, is that you're going to see more and more of these commercial type operations moving away from the urban centers to suburban centers and along transportation corridors, which we see not only as driving additional building activity, but additional infrastructure improvements as well. And these conversations are already ongoing in all sorts of legislatures and all sorts of places about building out along transportation corridors. It's certainly a big topic of conversation in California, and we expect to see more of that. So, no, we are not seeing softness in our business, and we don't see any future softness in our business as a result of what's happening with commercial activities right now. Hamza Fodderwala: Scott, just a follow-up question for you. Obviously, stronger than expected Q2. Andrew spoke to an improving pipeline in the back half. Just wondering the reason for the high end of the revenue guide declining a bit versus last quarter. Was that – the explanation there similar to what you mentioned for billings earlier? I'm not sure I fully understood. Scott Herren: No, it's slightly different, although it's got the same root cause. So, I'd start by saying, I'm really pleased with our results and proud of our execution in the second quarter. In an incredibly uncertain environment, to be able to produce the results that we just put up is something that I think we all take a lot of pride in. And as a result of that, as you saw, we raised the midpoint of our full-year revenue guide by $15 million. So, that's kind of the high level view. When you look at how we did that, we've pulled up the low end and slightly reduced the high end of that guidance range. I think your question is just about the slight reduction on the high end as we narrowed the range from what had been $100 million range. With only six months left, we narrowed it down to $60 million. We're seeing good trends in the markets that have moved into reopening. We talked about China, Korea and Japan. Product subs renewal rates are trending in the right direction. We mentioned the pipeline. The pipeline is very strong. There's still a fair amount of uncertainty, particularly in the US and in the UK. And so, as we weigh all that together, it's the combination of those factors that give us the confidence to raise our overall revenue guide by $15 million at the midpoint. But we had said the high end of that guidance range – and this is the point I talked about earlier, Hamza. At the high end of our guidance range, previously, we were expecting a swift recovery. And while we've seen that in some markets, we haven't seen that in all markets. And so, that's why narrowing just slightly from the high end of the revenue range made sense. Operator: And our next question comes from Joe Vruwink with Baird. Joe Vruwink: My question is on the product roadmap. Andrew, I thought the blog post you had recently was interesting because it kind of shows this mindfulness of striking a balance, investing in certain functionality and anything that maybe gets a pass in a given year you circle back to, which I think was the case with Revit architecture. I guess my question is more on the go forward. There's going to be this interplay now, not that it's new, but it's going to increase where you have your core Revit, Inventor users that are increasingly tapping into cloud functionality, and it's only going to go up now. Do you have to be mindful about certain things with this audience shifting to the cloud where maybe you shift your investment priorities or different things in the product portfolio receive greater investment? Any meaningful changes you foresee because of this kind of newer, structurally higher dynamic that's in place? Andrew Anagnost: Shift is not correct – not necessarily the right word. What it really will be is where we put new dollars. So, for instance, at the beginning of this year, this whole concern around architecture and architects, this is something we saw coming because this has been a five plus year kind of tension around – with the architects. So, we actually increased investment in AutoCAD Architecture at the beginning of this year. So, we actually used incremental R&D dollars to increase investment in that space. What it will mean moving forward is how we deliberately choose where we add incremental investment, and we've been very rich and forthright with the construction space in terms of incremental investment. We're not going to shift money away from that. But as we add incremental investment into next year and year after that, we'll probably add more incremental investment into other places over time. So, rather than thinking about it as a shift, Joe, I think of it as, as we continue to add incremental investment, which we're in the enviable position to be able to do, we're spending more in R&D than we ever had in our history. And we have still room to invest more, we're just going to choose deliberately to add incremental investment in certain spaces, like we did at the beginning of this year for architecture. Operator: Our next question comes from David Hynes with Canaccord. David Hynes: Two questions from me. I'll start with you, Scott. Curious what the lag time was between the uptick in active use and then the resumption of demand that you saw in APAC? And I guess the question is, if the same held true in the Americas based on what you saw in July, when would you expect to see an uptick in demand here? Scott Herren: I don't really want to get into parsing it quite that finely for you, David. What we did see is, as the usage ticked up, there was a bit of a lead time, but it's not measured in months. But there was a bit of a lead time between usage ticks up and when the actual new product sales pick up. And our expectation, not only have we seen that in APAC now, but we've seen the same phenomenon as the markets have reopened in Continental Europe. So, our expectation is as we get more into a reopening in the United States that we'll see that same thing here. I think the UK is dealing with a slightly separate issue than just the normal recovery from the pandemic. David Hynes: Andrew, one for you. Curios what the education channel – I know it's not a revenue driver for Autodesk. But obviously, it's training future users. So, I'd be curious what you're seeing there, just given the uncertainty around back-to-school processes and enrollment numbers. Any color would be helpful. Andrew Anagnost: Yeah. Education usage is up for us. All right? I think, frankly, the remote nature of work is kind of playing nicely into our strategy in certain areas, especially with regards to the cloud and how the cloud interacts with certain parts of the curriculum. Certainly, on the university side, Fusion is doing well because of its cloud foundation. And remember, we have Tinkercad in K-12. So, Tinkercad is getting more visibility in a lot of curriculums right now as well. So, education has done really well for us during the pandemic in terms of – it's not that we haven't seen declines in usage. We absolutely have. But it's rebounded back to usage levels that we had in pre-COVID days, which is a positive sign. And we're seeing gains in educational usage in places where the cloud is a priority for the usage paradigm. Operator: And our last question comes from Jason Celino with KeyBanc Capital Markets. Jason Celino: Maybe one quick one for Scott. More of a forward-looking question. I think there have been a lot of questions on what you're seeing in churn today. But, I guess, what are you building in the guidance? Because I think last quarter, you mentioned that you are building in some conservatism around that for the second half. Scott Herren: Our expectation – I'm quite pleased, actually, with the way the renewal rates on products subscriptions, which is by far the biggest piece of our subscription base, has progressed throughout the quarter, and it's our expectation that we will continue to see slight improvements on that through the end of the year. That's kind of now looking across all countries. Obviously, it varies a bit by region as different regions are recovering from the economic impact of the shutdown differently. But I think, in aggregate, what the expectation should be, continued slight improvement in those renewal rates on product subs. Maintenance is quite small. It's not surprising to see churn rate increase on maintenance as we've now informally announced the end of life of maintenance. And it's kind of the last chance to either renew, convert or churn. And so, we're seeing an increase in both renew – I'm sorry, we're seeing an increase in both convert and churn at the same time, which is in line with our expectations. And of course, maintenance is quite a small element of our overall subscription base and our revenue base at this point. So, not surprising on that front. And I would expect to see that maintenance churn rate continue at a higher-than-normal level through the end of the year. Jason Celino: One for Andrew really quick on Fusion 360. The net additions that you mentioned, any way to think about where those came from? Were they existing users or completely new users? And were they using cloud before? Andrew Anagnost: It's kind of all of them. All right? There were existing users that added more. So, we've had expansion. We're getting bigger and bigger Fusion installations, which is a good sign. There are also new users at the low end of the market. We see a lot of users consolidating their CAM and design solutions at the low end of the market into Fusion and moving forward with Fusion. So, it's kind of a combination of all those things. We saw some users converting from some of our hobbyist versions to commercial versions. So, it's across the whole spectrum. But really, the big drivers are, we're selling more into accounts where we had it and we're selling more down market into accounts that are basically unifying their portfolios inside of their operations. Operator: Thank you. And this is all the time we have for today. I would now like to turn the call back over to Abhey Lamba for closing remarks. Abhey Lamba: Thank you, Joelle. And thanks, everyone, for joining us today. Please reach out to us if you want to follow-up on anything. This concludes our call for today. Thanks. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
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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.