Autodesk’s Resilient Subscription Business Helps Offset Headwinds; Shares Fairly Valued

Wide-moat Autodesk reported second-quarter financial results largely in line with our expectations. Sales growth was broad-based with Autodesk seeing year-over-year increases in each of its five product families and each of its three geographic operating regions. It achieved this despite headwinds in Russia stemming from the war and in China from COVID-19 lockdowns. There was an additional headwind from the strengthening of the U.S. dollar, which reduced full-year billings, revenue, and free cash flow to the tune of approximately $20 million, $5 million, and $5 million, respectively. We are encouraged by Autodesk’s continued successful effort to mitigate cyclicality from the business through its subscription model, best exemplified by Autodesk Build’s monthly active users, or MAUs, growing 45% quarter over quarter. Our belief in Autodesk’s long-term prospects remains unchanged and we are maintaining our $230 fair value estimate. Due to the encouraging results, shares are up over 6% to $227 per share after hours—nearly exactly at our fair value estimate.