Autodesk, Inc. (ADSK) on Q4 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Autodesk Fourth Quarter and Full Year 2021 Results Conference Call. I would now like to hand the conference to your speaker today, Simon Mays-Smith, Vice President of Investor Relations. Please go ahead, sir. Simon Mays-Smith: Thanks, operator, and good afternoon. Thank you for joining our conference call to discuss the results of our fourth quarter of fiscal year 2021. On the line with me is Andrew Anagnost, our CEO; Stephen Hope, Vice President and Chief Accounting Officer, and Abhey Lamba, our Vice President of Go-to-Market Finance. Andrew Anagnost: Thank you, Simon, and welcome everyone to the call. I hope you and your families remain safe and healthy. Before jumping into our fourth quarter and full-year results, I would like to again thank our employees and the families and communities that support them as well as our partners and customers, for their continued commitment during uncertain times. That commitment, combined with our resilient subscription business model and the secular shift to the cloud, enabled us to maintain momentum and exceed our goals. We generated strong growth, with full-year subscription revenue and remaining performance obligations or RPO up 26% and 19%, respectively. We also made significant progress toward digitizing AEC, converging design and make in manufacturing and converting non-compliant and legacy users. We signed a record number of new enterprise business agreements, or EBAs, in the fourth quarter. In fact, they were equal to the number we signed in the entirety of the previous year. That’s a testament both to our execution and growing partnership with our enterprise customers as we enable their digital transformations, demonstrated by enterprise BIM 360 usage nearly doubling year-over-year. While we made great strides this year, we intend to extend our leadership in the cloud and expand our presence in existing and adjacent industry verticals across the globe. Operator: Our first question comes from the line of Saket Kalia from Barclays. You may begin. Saket Kalia: Okay, great. Thanks, Andrew for taking my questions here and congrats on the new additions to the team. Andrew Anagnost: Thank you. Saket Kalia: Maybe just to start you touched on this a little bit in your prepared remarks, Andrew, but can you just talk a little bit about how you’re thinking about new business recovery this year and maybe just broad brush, what verticals or GEOs might be stronger than others? Andrew Anagnost: Yes. Thank you, Saket. I think that’s a really appropriate question to open up with. As you know, new business was down last year and that has a disproportionate impact on how we see revenue in Q1, but the way we look at it shaping up this year is Q1 is kind of the trough of the new business recovery. And we’re going to be accelerating our new business growth out through the year into the second half of the year. In fact, we really see a world where most of the new business that didn’t show up last year, kind of reemerges as we head through this year. So it’s important to see that business that disappeared last year didn’t disappear. It just got shifted out. In fact, you’re hearing a lot about the acceleration of digitization in multiple industries, and we’re seeing that in our space in spades as well. And I think if we look at particular sectors, it’s actually really going to be distributed across all the sectors and kind of similar ways. AEC is already investing really significantly ahead of the market in terms of their digitization efforts. You kind of saw early evidence of that with the EBA business we did. The record number EBAs we did in Q4 relative to previous years. In manufacturing, you kind of see the same accelerated interest in digitalization and new cloud-based workflows, especially surrounding what we’re seeing in fusion. The same goes in media entertainment. The media entertainment business, which was classically a laggard on some of these highly digital, highly cloud integrated workflows is moving to the cloud in a big way. Now, geographically kind of in a broad-brush, I kind of highlighted in the opening remarks that, we saw a broad recovery in Europe and Asia to pre-COVID levels of monthly active usage. And we saw a little bit of a lag in the U.S. and the UK. I think we’re going to see that kind of geographic fraternity new business in that cascade. It’s going to be strong in APAC. It’s going to get strong in Europe, and then it’s going to start to come back in the U.S. and the UK. Q1 will be the trough of this new business growth, and we’re going to accelerate right out of that into the rest of the year. Saket Kalia: Got it. That’s really helpful. Maybe for a follow-up, understanding that Innovyze hasn’t closed, it isn’t included in guidance. Can you just give us some broad brushes on maybe how big that revenue scale there is, and maybe just touch on whether there are any significant differences in the business model versus Autodesk? Andrew Anagnost: Yes. Differences in opportunities, Saket, so first off, let’s just kind of just level set on why we did Innovyze. I think we’ve been super clear that infrastructure is one of these really big growth opportunities for us long-term. Infrastructure projects take a long time to design and plan, and they last even longer after that. So an investment in infrastructure is an investment in the long-term health of Autodesk. And I think we just have to be super clear about that. Water was one of those areas where it would have taken us all a lot of time to catch up organically, whereas road and rail is an area we’ve been highlighting to you that we’ve been investing in organically with our portfolio and really making great strides there. When you look at the business at a high level, in terms of the differences and where the revenue is going to come from. So look, at a high level, Innovyze is going to be accretive to our revenue growth, roughly to a percentage point, as we head into this year that includes deferred revenue write-offs and the fact that we have a partial year in here, it’s probably going to be dilutive this year about a percentage point off of operating margin. But here’s the opportunity that I want to make sure you highlight. You actually poked out a little bit between the differences in our business model. Not only are we going to plug Innovyze into our sales engine, in terms of named accounts, channel sales and international expansion. We’re also going to apply our expertise on business model transformation to the Innovyze product portfolio. And I think that’s going to be an important transitional element of how we absorb Innovyze into the company. We’re good at this. We know how to do this, and we know how to navigate this. So what you’re going to see in FY 2023 is you’ll probably see a little bit of a depression of Innovyze’s revenue growth in isolation, because we’re going to be applying the business model transformation. And as you know, with the business model transformation, there’s downward pressure in revenue as a result, but acceleration of revenue as you head out onto the other side of the business model transformation. So if we look at FY 2023, it’s probably going to be neutral to the overall revenue growth of the company. It’s not going to touch the free cash flow number $2.4 billion is going to come out Innovyze or no Innovyze. And they’ll probably be a little bit more of a headwind operating margin, maybe between 1% and 2% as we go through the business model transformation, but a nice acceleration up to our double-digit growth standards as we head beyond FY 2023 to 2024, 2025 and 2026, which is kind of an extra bonus on top of what we’re going to be able to do, just to expand the core Innovyze water business, to capitalize on the increasing investment in infrastructure. So it’s a good question to talk about the differences in our business model, because there’s actually an opportunity there and a difference. Saket Kalia: Very helpful, Andrew. Thanks again and congrats on the new additions to the team. Operator: Our next question comes from line of Phil Winslow from Wells Fargo. You may begin. Phil Winslow: Great. I thank everyone for taking my question and then congrats on a strong close to the year. And once again, congratulations on the new hires in particular. Great to have Debbie back. Really want to focus on the mix side of Autodesk. How do you think about it in a reopening scenario and given the fact that we have a lot of backlog of projects, particularly in the construction and infrastructure world you’re heading into this year, what is the opportunity for Autodesk to potentially accelerate adoption of some of the main functions, BuildingConnected, PlanGrid to try to help the industry work through this backlog? Andrew Anagnost: Yes. So we actually started to see the early signs of that as we headed into Q4 as new business, starting to strengthen in our construction portfolio in particular. And we also saw it across the Fusion base, as well as people started to look at their manufacturing and the design to manufacturing operations. So we see a pretty significant opportunity here. Look in many ways, the pandemic gave us an opportunity to catch up and pull ahead a little bit here. Our portfolio is now best-in-class. Our development team did an incredible heavy lift and an amazing job unifying what was the best of PlanGrid, which with the best of what we had in BIM 360, we now have Autodesk Build on this foundation of Autodesk Docs. And there is no one that has a better office to trailer solution than we do. And I think if you go out there and you talk to customers and you talk to this space and they look at what we’ve done with Autodesk Build, you’re going to hear the same kind of feedback that we really built a great product, and that’s the product we’re going to be leading with on new business. It’s not that we won’t be leading on the acquired portfolio products as we continue to sell those, but we’re going to lead with Build, and we’re going to lead with Build in many places. And that’s going to give us a chance to not only drive a successful international expansion, but also continue to lap some of our competitors in the rest of the market, especially in places like the mid-market, but another one pieces of our secret sauce heading into the year, Phil, is the flexibility we offer on business models. We meet our customers wherever they are. And I think this is super important for you to pay attention to, we sell named user subscriptions. We sell site licenses. We sell project-based licensing when they want it. We sell consumption inside of EBAs, whatever they need for whatever project they’re pursuing. We have a model for them and a product for them. And I think that important convergence between the flexibility, which by the way, costs us complexity in the backend, but it’s worth it in terms of meeting the customers where they are. When you combine that with the products, we feel really, really optimistic about how we’re going to accelerate in this year and meet some of this demand. And our customers are looking for it. They want to digitize faster. They’re starting to increase their spending. And we think we’ve got the portfolio of products and the portfolio of purchasing options that makes it work. We’re not trying to force people into one kind of business model, and then maybe try to lock them in kind of places that they don’t want to be. So we feel pretty optimistic. Operator: Thank you. Our next question comes from the line of Jay Vleeschhouwer. Andrew Anagnost: No follow-up from Phil. So we didn’t get a follow-up here. Operator: Not at this time. Our next question comes from the line of Jay Vleeschhouwer from Griffin Securities. You may begin. Jay Vleeschhouwer: Thank you. Good evening. Andrew, the company has quite a lot on his plate, a very broad agenda. And the question is within the context of your three overarching strategic priorities, obviously making the numbers that you guided to now for fiscal 2022. Can you talk about some of the other critical programmatic executable that you are aiming for this year? For instance, in terms of a channel in terms of delivering on the platform, going live perhaps with PPU other critical technical milestones that you might care to talk about in terms of new products like Tandem and Spacemaker and so forth. And then secondly, on the last call, you noted that within your peer group, Autodesk is the largest R&D spender, which is the case, but could you talk in a little bit more detail about how you’re allocating R&D? Maybe talk about the priorities you’ve spoken of reinvesting in the AEC? And maybe talk about some of those critical investment priorities views in the R&D? Andrew Anagnost: All right. So there was – it’s usually a multi-party question from Jay. All right. So let’s talk about some of the programmatic pieces here. Now I don’t want to take any thunder away from this year’s AU, which is where we talk a lot about, as you probably noticed with last day, you’re going to see more of a product announcement focused AU, as we move forward. So I don’t want to take any thunder away from that. But if you look at programmatically where we’re going to be leaning into, platform enhancements that bring design and make and industries together and create commonality across many of the industries we serve are going to be a particular lever that we’re to be moving with. We just hired a new CTO with a lot of platform strategy chops that we’re going to be leveraging to integrate some deeper platform capabilities into the company. We’re also going to be looking programmatically at the named user transition program, as you know, that was kind of a bumpy program last year. The customers really didn’t appreciate us introducing that into a pandemic year, and they really want to understand what their options are with regards to flexible usage and occasional use moving forward. For so look for us to explore those kinds of capabilities as we’ve extended out, what the deadline was in that program, which still makes that program being executed faster than maintenance subscription, but probably more on a timeline that fits with what our customers can absorb. So you’ll see us kind of look at those flexible options and explore some of those things with our customers. Now, if you look specifically at how we’re allocating investment, I mean – I think you saw what we did around the A in AEC. We acquired Spacemaker. We’re integrating that team, building up capabilities around that team, particularly around integrating machine learning and cloud-based platforms into the design process in architecture and engineering. So that investment is clear, we’ve highlighted it. You’ve just seen how we’re investing in infrastructure and civil infrastructure. We’ve already talked organically about road and rail. And now we’ve also talked about water and all of this kind of builds on top of what we’re doing with Construction Cloud. I haven’t talked a lot about what we’re going to be doing with manufacturing, but here’s what I can tell you. We’re very interested in the cloud transformation in manufacturing, and I think you’ll see us lean deeply into the cloud transformation around manufacturing more. We’ve invested pretty heavily there. Our investment is large in that whole portfolio, particularly in the Fusion portfolio. I think you’ll continue to see us to invest to that area. And as we head towards AU, you’ll hear exciting things about Fusion. You’ll hear exciting things about Tandem. You’ll hear exciting things about the platform for the company. And you’ll hear exciting things about how the AEC portfolio is starting to come together in a similar way that we brought together some of the construction portfolio acquisitions that we did previously. So look for us to kind of play across all those fields. Now, in terms of the breadth of what we’re doing, I think I might’ve talked about this last time. We reverticalized the company just recently in October. So now I have someone that’s responsible for the AEC execution. Again, that’s Amy Bunszel, Scott Reese working on the execution and product design and manufacturing, and Diana Colella working in the media and entertainment space, and they are working closely with me and the rest of the team to execute on these vertical priorities while we’ve also elevated platform up to a executive staff level, reporting directly to me, which will allow us to synergize the platform efforts more tightly with those things. So we’re doing this from an operational perspective, as well as from a strategic investment perspective. Jay Vleeschhouwer: Okay. Thank you, Andrew. Andrew Anagnost: You’re welcome. Operator: And our next question comes from the line of Gal Munda from Berenberg Capital. You may begin. Gal Munda: Hey, thank you for taking my questions. So the first one, I was just like to ask you, Andrew, when you kind of look at how the year played out in terms of the multi-years there or network licenses, versus what you expected. Is it fair to say that you’re kind of ride bang in the middle to that two to one thing that you expected and you’ve just extended the program to 2023. Does that mean that you’re kind of very comfortable with the way that this program is kind of converting and you think that it’s going to remain at that level where it’s not a significant headwind to the model? Andrew Anagnost: Yes. So look, our original statements about this being neutral to the model, continue to hold. So there’s no change in that expectation. I think what you saw last year, and I think this is a natural thing, like there’s two sides of the bell curve, right? There is the size of the bell curve for which two for one is like, hey, that’s a no brainer for me. I’m going to take the two for one. And there’s a size of the bell curve for which two for one requires some more thought by the customer. More thought about – okay, wait a second. My usage is greater than two for one, Autodesk, what are you going to do to allow me to be flex a little bit more an EBA is too big for me. So what you saw early on is a lot of those people on the left side of the bell curve, the 50% of people that were up for renewal last year that said, hey, this is good for me. They moved quite rapidly through that, right? The extension is for the people that require more thought about how this is going to impact their business and how they’re going to adapt if their usage is greater than the two for one that the program had. So that’s one of the reasons why we’re working on the extension also to ensure that we have the new flexible models out there for them to explore. So there’s no change in our expectations, which regards to the impact on our business. It’s going to be over in the whole period of the program neutral in terms of impact to our business. Positive long-term in terms of experience for the customers. Gal Munda: Yes. Absolutely. And then just the second as this follow-up. You mentioned that for this year, you, again, expecting kind of mid-20s long-term deferred revenue in terms of the, you said, no material contribution to free cash flow. When we look into more towards FY 2023 and then maybe even beyond that, we’re hearing this, multi-year licenses is still been very, very strong even during the pandemic. So what would be the normal rate that you kind of think about if you think maybe more longer term, not just next year and maybe the year after? Andrew Anagnost: Yes. So Simon, remind me what we’re reverting. So one of the things we’re doing, and I want to make sure we’re super clear on this with regards to multi-year. With multi-year our expectations that are revert solely back to the mean here. All right and not try to exceed what we’ve done historically, okay? And I just want to make sure that we understand that and we can get ourselves grounded in that simple fact. We’re reverting back to the mean behavior and yes, as we ended last fiscal year, right, we saw quite an interesting pickup in multi-year, frankly, more than we expected, all right, given that we were still in the pandemic year, but if we look at where we want to be, it’s just a reversion back to the mean. And remember that the multi-year business is attractive to both our channel partners and our customers, because our channel partners liked to collect the cash up front. And our customers like to lock in the price protection for multiple years. And if you recall, reversion to the mean historically for our maintenance business was about 30% of the business, roughly speaking. We want to stay right within that domain and we will probably stay within that domain for the foreseeable future. And that was adjusted peak, not the mean, okay, a piece to 30%, not in the middle. The mean was probably somewhere in the mid-20’s. Gal Munda: Got you. Thank you, Andrew. Operator: Our next question will come from the line of Adam Borg from Stifel. You may begin. Adam Borg: Great. Thanks for taking the question and also welcoming the new folks coming in. Maybe just a question on the net revenue retention rate. Obviously, the pandemic and speed of recovery will be the key input in the near-term. I was just curious, Andrew, if there’s any kind of initiatives you’re working on internally that can help drive net retention revenue rates back to the historical range. Thanks so much. Andrew Anagnost: Yes. So we’re hitting the ranges that we’ve set for net revenue retention. And frankly, obviously there’s two things that drive net revenue retention, renewal rates and AOV renewal, and the ability to expand into accounts, right? And so we’re working both of those sides in terms of increasing renewal rates and increasing our ability to expand in accounts with the make solutions. So when we look at net revenue retention, remember, one of the things that we saw and I think we highlighted this a lot over the last year was how strong the renewal rates lasted throughout the – through the last year and how we continued to move forward. So we actually overperformed based on our expectations on renewal rates of the business. We continue to see – we continue to expect that to accelerate. But more importantly, the net revenue retention is going to be driven by more and more people incorporating our digital portfolios, Construction Cloud, Fusion, other types of products like that and also moving to BIM in the AEC space. So look for a lot of the increases in net revenue retention to be programmatically driven by the move to BIM, the move to digitize in the cloud – in Construction Cloud and the move to transform their manufacturing processes with Fusion 360 and other solutions like that. Adam Borg: Great. Thanks again. Operator: And our next question will come from the line of Sterling Auty from JPMorgan. You may begin. Sterling Auty: Yes. Thanks. Hi, guys. Just one question from my side. In the context of the improving economy, I’m wondering what if anything you contemplated in that improvement in the business coming from the possibility of further stimulus spending from the government and in particular Andrew Anagnost: We do not factor that in, okay. Governments move slowly, the money trickles down slowly. So we have not factored any of that into our plans and into our guides. That said, we do expect it to be an investment. You probably have heard that the American Society of Civil Engineers in the U.S. rated U.S. Infrastructure a D+. Other countries aren’t doing particularly well either. This is an area for investment and focus. And we expect to see some of that investment focus, but we haven’t factored this in. Sterling Auty: Thank you. Operator: Our next question will come from line of Joe Vruwink from Baird. You may begin. Joe Vruwink: Great. Hi, everyone. One modeling question first and then one on the business. Just when looking at the first quarter guide, I think the revenue variance in terms of variance to consensus estimates that seems explained by the couple 100 basis points you talked about. But I’m wondering in terms of the EPS variance as a bit wider. Are there some discrete investments that take place in 1Q? Is this a function of the extra day thrown into the mix? Or I guess, the question is how do you see margins progressing throughout the year and as 1Q kind of different than just the normal cadence? Andrew Anagnost: Yes. So this is a really important question. So let’s talk about Q1 and the shape of the curve and what actually drives revenue in Q1. So I think I said earlier, Q1 is actually at the trough of where we expect things to be. We’re going to accelerate quite rapidly out of Q1. But what actually drives the revenue guiding Q1? The most important thing is the revenue recognition. So let’s look at last year. Last year, we did not grow a new business to the degree, we expected to. In fact, we saw declines year-over-year in our new business. The impact of those declines in new business bookings in the previous year have a disproportionately large effect on Q1, but they worked themselves out relatively quickly as you move into Q2, Q3, Q4 and beyond. So we absolutely do have a somewhat more backend loaded year than we would in a classic Autodesk year, but not extremely disagreed simply because of the hole that was created. And I think I said earlier, the new business that we lost in last year, it didn’t disappear. It’s coming back and it’s coming back with a vengeance as we head into the next year. But there’s a couple of other little factors that affect Q1 disproportionally. And I think it’s really important that we all get grounded on some of these things. So the first one is, we have a set of products that because they are not yet cloud enabled to a certain degree are recognized upfront in the revenue – in the accounting rules. They have to be. We have been working hard to ensure that all of those products are cloud enabled and that will actually force them to be recognized ratably. One of the products that is moving from upfront recognition to ratable recognition is the Vault product family. And that Vault product family was providing quite a bit of upfront revenue recognition previously. And now, as we enter Q1, it’s all going to be recognized, ratably because Vault now has a mobile client, it now has other cloud enabled features in it. So that was all of a sudden a headwind to revenue recognition in Q1, but it works itself out as the year progresses, as the relatability progresses and the buildup progresses. And this is just the way a subscription business model works. So there’s some unusual sort of one-time headwinds to Q1 that unwind themselves fairly quickly. And Q1 is the trough and we will accelerate out of there, but it’s definitely related to the buildup of recognized revenue as we progress. So that – I hope that helps you understand a little bit more how Q1 works. Yes, there are some additional little details like Q1 is one day shorter this year, year-over-year. So it’s actually one less day of revenue in the quarter and it’s three days shorter than quarter-over-quarter. But those other things I talked about are much more important for understanding the Q1 guide and how it unwind as the year progresses. Make sense. Joe Vruwink: It does. It does. Thank you. And if I can squeeze in one more. Just as you engage with your customers and they come back and you’re booking new business. But as they talked to you about the composition of what they see going forward and their view on how a non-res construction cycle might develop. What are you hearing in terms of similarities? The cycle is going to be like, out of 2008, 2009, out of 2001, 2002 or what are some of the differences that you’re hearing? And how did those similarities or differences impact Autodesk just given how your product portfolio has changed? Andrew Anagnost: Yes. So remember, first off that we are distributed across almost all facets of the industry, and it’s important to realize that when one wobbles, another one pops up. And we’re absolutely seeing that pattern. So for instance, you see in commercial real estate development, you see a slowing of projects. You actually do see a rebooting of project that had been put on hold by the pandemic, but you see a slowing of new projects. But you see other new projects coming in the pipeline in terms of urban multi-family housing, suburban multi-family housing, other types of commercial real estate outside of dense urban areas. So we’re hearing a lot from customers about a shift in where their portfolios are moving to. One thing we are getting consistently though, is an ongoing focus on adopting certain aspects of our cloud portfolio, particularly, what we do with Autodesk Build collaborations. The collaboration tools for Revit models. We’re seeing a lot of increased adoption in that, we saw a lot of strength last year. We’re seeing some of that strength heading in. I think that’s going to be an important part of our portfolio moving forward, because not only does it allow for a seamless remote work, but it also allows for better downstream integration to the rest of the build process. So we’re seeing a lot of those tools being adopted, and we’re also seeing a lot more adoption of some of the cloud-based tools that we’re seeing in manufacturing. So the cloud is definitely front and center in terms of some of the growth areas in our portfolio, but do not underestimate BIM and the role of Revit in the digitization of AEC, it will continue to be a strong driver in the new world order, but it’s uneven. It cuts very across geographies, across segments. You definitely see differences in terms of where people are going to seeing things booting up and where they see things slowing down. But like every cycle we’ve ever seen, the money just shifts to somewhere else. Joe Vruwink: Thank you. Operator: Our next question comes from the line of Matt Hedberg from RBC Capital Markets. You may begin. Matt Hedberg: Hi, guys, thanks for taking my questions, and that was really good color on Q1. I think that makes a ton of sense. And also my congrats to Debbie, it’s really good to see you back at Autodesk. I guess, Andrew now that we’re sort of unwinding uncertainty, I think that’s a term you’ve used before. When we think of the trajectory to 2023, I mean, I just would kind of like to get me to some high level thoughts there. And I guess even more so, beyond 2023, what’s the right way to think about that as we enter this new fiscal year. Andrew Anagnost: Yes. So thank you for this question, right. And it’s an important question. So first off, I want to make sure that I just reiterate something I’ve said many times before. We model our business with super high fidelity, okay. And within those models, we never put forward our best case, right. We always had a buffer in there at some degree, buffers are great for like pandemic years. You love it when you have a buffer. Now, of course, as you get closer to events like FY2023 and things associated with that. The buffer gets smaller, but the accuracy of your model also gets better as well? So we have super – we have a lot of confidence in the buildup to FY2023, the $2.4 billion in free cash flow, the organic metrics surrounding our business and we also have a lot of confidence in the double-digit growth as we had beyond fiscal 2023. Fiscal 2023, isn’t some event, it’s just another milepost like fiscal 2020 was fiscal 2023 is. It’s another milepost on a journey, but there is ongoing growth in the double digit range out beyond fiscal 2023. Now I think one of the things people anchor on right now is what about this buildup from 2022 to 2023? One of the things I want to remind you is about the nature of how momentum is going to be exiting 2022. Remember, we’re going to be slightly more backend loaded in terms of the accumulation of revenue in new business heading into fiscal 2023, not dramatically backend loaded, but more backend loaded than we were traditionally be. We’re going to exit 2023 with quite a bit more momentum than the full year targets would indicate, all right, relatively speaking in terms of those outcomes. So we feel pretty confident with the momentum we’ll exit FY2023 with, and that we have the book of business from the renewal base, from the continuing digitization of AEC, from the continuing convergence of design and make and manufacturing, and to the conversion of non-compliant users to hit the numbers that we have in FY2023 and beyond. And we were confident in our models, we’re confident in the margin of error. We’re confident in the levers we can pull if we had to pull any. So we see line of sight to some of the organic goals that we’ve been talking about, and we continue to be confident even with what seems to be a big buildup from 2022 to 2023, you just have to pay attention to the momentum we have as we exit the full year 2022 into 2023. Matt Hedberg: Super helpful, very clear. Thanks, Andrew. Andrew Anagnost: No different than that 2019 to 2020 discussion that we had. I think like yesterday, but it was three years ago. Matt Hedberg: It does. Thank you. Operator: Our next question will come from the line of Keith Weiss from Morgan Stanley. You may begin. Keith Weiss: questions, I wanted to dig into the recovery. So our survey work shows expectations are getting a little bit pushed out from the kind of first half of 2022 to the next quarter end. We’ve heard from you and your peers on a slow recovery. So kind of what are you hearing from customers and what do they need to see in order to pick up the pace of recovery? And also where are the areas that you see there could be some risks that it could get further delayed. Thank you. Andrew Anagnost: Yes. So first off, our customers have to invest ahead of their project load in order to be successful. Remember our tools show up not only in the execution phase and the make phase, but also very early in the early conceptual design phases. And one of the big areas of strength that we saw in Q4 was that large increase in enterprise business agreements. We see the record number of EBAs we saw is kind of an emblematic of customers investing in future digitalization capacity. So we expect to see that regardless of the situation in the markets right now. But our view continues to be Q1 the trough, the acceleration starts to come out of Q1, as we head out of the spring and into the summer. Right now there’s lots of uncertainty and you hear lots of buzz around variants and vaccine distributions. But I think all of us are smart enough to know that just like when we have these discussions about testing infrastructure and testing rollout and testing capacity, all these things work themselves out over a multi-month period in terms of distribution of vaccines, distribution of assignment of capacity and all the things associated with that. Now, if all of that stuff starts to crumble and fumble, of course, you end up in a new situation, but that is highly unlikely in this situation. And there’s much more alignment on trying to get the right things done. And that’s what we’re hearing from our customers more and more is they’re trying to invest ahead of the growth they see coming forward. So we’re pretty bullish as we head into the second half of the year and we’re pretty optimistic as we head into the summer. There’s always something that can derail this, a wobble in the vaccine distribution or something associated with that or some kind of rise of political uncertainty. But you know what, we can’t predict those things. And we don’t see those things. And what we see mostly are tailwinds right now, as we head out of Q1 and into Q2 and beyond. Keith Weiss: Great. That’s super helpful. And then just to sneak one more in, your comments on the areas investment were certainly helpful. But just taking a step back, the Innovyze deal was one of the largest acquisitions to date. I believe it was above PlanGrid. So how should we just think about the kind of higher level framework for investing organically in R&D versus kind of the acquisitions as a source of innovation? Thank you. Andrew Anagnost: Yes. So we tend to invest organically in innovations that either we’ve been invested – that we’ve been working on for a period of time, that it represents net new business opportunities that we will acquire to net new business opportunities where there’s like, no mature market yet. But we will tend to acquire in areas where we’re seeing long-term opportunities or opportunities for enhanced digitization or enhanced cloud capability in verticals where we might not have established vertical – businesses or sub verticals where we might not have established businesses. But make no bones about it. Our organic investment is very much driven on this convergence of design and make in both AEC and manufacturing. And on this convergence of manufacturing and construction across our industries, we’ve got a lot of organic focus and the innovation in those areas. We will acquire inorganically for innovation in certain cloud-based areas, but more likely, we’ll acquire for vertical specialization in areas where established businesses have created a presence. Keith Weiss: Great. Thank you so much. Operator: Thank you. Andrew Anagnost: And I think Innovyze is indicative to that. Operator: Unfortunately, that’s all the time we have for questions today. I’d like to turn the call back over to the speakers for any closing remarks. Simon Mays-Smith: Thank you everyone for joining us. I know it’s a busy night for many of you. Look forward to catching up with you next quarter’s results. If you have any questions in the meantime, please contact us, simon.mays-smith@autodesk.com, look forward to chatting soon. Operator: Ladies and gentlemen, 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.
