Company Reports

We raise our fair value estimate for wide-moat Autodesk to $275 per share, from $247, after the company reported strong results for its fiscal fourth quarter. Both revenue and earnings per share exceeded both our expectations, as well as the top end of guidance ranges. The outlook was similarly ahead of our model for fiscal 2025 guidance, which is partly driven by a new, more direct sales process. As a result, we have increased our estimates for fiscal 2025 and 2026 for both revenue and profitability. We remain impressed with Autodesk’s resilience in a challenging environment—strength in enterprise renewals was once again a highlight, and construction remains solid. In the aftermarket, shares are trading near our new fair value estimate, leading us to conclude that shares are fairly valued after a strong run in the stock over the last three months.

We view Autodesk as the global industry standard computer-aided design software. Millions of industry professionals rely on Autodesk software to design and model buildings, manufactured products, animated films, and video games. We think Autodesk will remain the industry standard, as its switching costs and network effect continue to reinforce one another and Autodesk stays at the forefront of industry trends. The company now has over 95% of revenue recurring, after a gradual transition from licenses the past eight years. We think the change enables Autodesk to extract greater revenue per user as it upsells its loyal and increasingly maturing base.

We maintain our $247 fair value estimate for wide-moat Autodesk after the firm reported fiscal 2024 third-quarter results moderately above our expectations. We remain impressed with Autodesk’s resilience against a tough environment, as we saw strength in enterprise renewals and construction demand offset currency headwinds and weak new subscriber growth. Increased confidence in fiscal fourth-quarter performance led management to raise its full-year guidance, which is now more in line with our own estimates. With current shares down around 4% afterhours, we view the stock as undervalued and note an attractive buying opportunity for long-term-oriented investors.

Autodesk is considered the global industry standard computer-aided design software. Millions of industry professionals rely on Autodesk software to design and model buildings, manufactured products, animated films, and video games. We think Autodesk will remain the industry standard, as its switching costs and network effect continue to reinforce one another and Autodesk stays at the forefront of industry trends. Autodesk now has over 95% of revenue recurring, after a gradual transition from licenses the past eight years. We think the change enables Autodesk to extract greater revenue per user as it upsells its loyal and increasingly maturing base.

Wide-moat Autodesk reported fiscal 2024 second-quarter results that moderately exceeded our expectations. Autodesk achieved strong results despite a difficult macroeconomic environment and currency headwinds through strong subscription metrics coupled with product and geographic diversification. Customers continue to increase usage of Autodesk’s software, resulting in enterprise business agreement usage surpassing limits built into initial contracts leading to a billings, free cash flow, and subscription revenue lift. Considering Autodesk’s difficult operating environment with its strong results and raised guidance, we are raising our fair value estimate to $247 from $240 per share. Shares popped over 6% afterhours, but despite the increase, we view shares as attractive and note a rare opportunity for long-term-oriented investors to buy this stellar wide-moat name.

Wide-moat Autodesk reported fiscal 2024 first-quarter results that were largely in line with our expectations. Continued foreign exchange headwinds coupled with contract renewal timing suppressed revenue slightly, and management expects revenue to accelerate as the year progresses. Business momentum was similar to the fourth quarter, with slight deceleration in new subscriber growth and current remaining performance obligation growth the same as last quarter coming in at 12%. However, Autodesk saw improved renewal rates. As noted in the fourth quarter, Autodesk’s transition from upfront to annual billings for multiyear contracts will affect billings growth for fiscal 2024. Despite the transition and currency headwinds, we have further confidence in Autodesk’s long-term noncore potential—from building information modelling to targeting infrequent users via its new Flex offering. As a result, we are modestly increasing our fair value estimate to $240 per share from $230 per share. We view shares as attractive, marking a rare opportunity for long-term-oriented investors to buy this best-of-breed name.

Autodesk is considered the global industry standard computer-aided design software. Millions of industry professionals rely on Autodesk software to design and model buildings, manufactured products, animated films, and video games. We think Autodesk will remain the industry standard, as its switching costs and network effect continue to reinforce one another and Autodesk stays at the forefront of industry trends. Autodesk now has over 95% of revenue recurring, after a gradual transition from licenses the past eight years. We think the change enables Autodesk to extract greater revenue per user as it upsells its loyal and increasingly maturing base.

On March 22, Autodesk hosted its investor day, spelling out how its market has plenty of drivers for future growth—from adoption of building information modeling, or BIM, to leveraging machine learning. Since we have been a firm believer in these growth avenues for Autodesk and its ability to monetize them, our model remains unchanged. However, we think this is still an opportune time to remind investors that the stock is trading in attractive 4-star territory given our $230 fair value estimate. We think this is a rare opportunity for long-term investors, as we think the stock boasts a wide moat and more often than not trades at a premium valuation because of its quality.

Autodesk is considered the global industry standard computer-aided design software. Millions of industry professionals rely on Autodesk software to design and model buildings, manufactured products, animated films, and video games. We think Autodesk will remain the industry standard, as its switching costs and network effect continue to reinforce one another and Autodesk stays at the forefront of industry trends. Autodesk now has over 95% of revenue recurring, after a gradual transition from licenses the past eight years. We think the change enables Autodesk to extract greater revenue per user as it upsells its loyal and increasingly maturing base.

Wide-moat Autodesk reported fiscal 2023 fourth-quarter financial results that were largely consistent with our expectations. While results were short of full-year targets due to persistent macroeconomic headwinds, we are impressed by the firm’s resilience thus far and expect solid market demand to prevail in the medium term. Management’s guidance was on the lighter side, as it expects foreign-exchange headwinds to continue to pressure results and lower overall billings as customers transition to annual from multiyear contracts. We are maintaining our $230 fair value estimate and view headwinds as transitory for this high-quality stock. We view the shares, down 3% after hours, as slightly undervalued.

Wide-moat Autodesk reported third-quarter financial results that didn’t surprise, coming right in line with our expectations all around. However, Autodesk experienced a slowdown of business in Europe and currency fluctuations, which had Autodesk missing revenue slightly on an as-reported basis. In terms of visibility, Autodesk’s customers are seeing pressure within some segments, but still seeing a fairly healthy book of business over the next 12-18 months, which gives us confidence that Autodesk’s near-term future is sound, along with unchanged midterm operating margin expectations. Nonetheless, the market reacted to the result negatively, falling by 9% after hours to $191 per share, which we believe is a result of lower billings guidance. However, the change of billings outlook is a factor of less demand for multiyear contracts ahead of Autodesk’s more aggressive push to transition to annual contracts next year. We do not see the premature annual contract demand as concerning. As a result, we are maintaining our $230 fair value estimate, leaving Autodesk shares undervalued, in our view, which we think represents a rare buying opportunity for this high-quality stock.

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.

Wide-moat Autodesk opened its fiscal year posting results largely in line with our expectations. Revenue strength was broad-based with Autodesk achieving year-over-year growth in all five of its product families as well as each of its three geographic operating regions. There were material headwinds stemming from the halting of all its new and renewal business in Russia and the strengthening of the U.S. dollar. The result from ceasing operations in Russia had a $40 million impact on the top line while the currency headwind accounted for a $20 million impact. We continue to believe in Autodesk’s subscription model which allows it to achieve recurring revenue and in turn omit cyclicality from its core business.

Autodesk is considered the global industry standard computer-aided design software. Millions of industry professionals rely on Autodesk software to design and model buildings, manufactured products, animated films, and video games. We think Autodesk will remain the industry standard, as its switching costs and network effect continue to reinforce one another and Autodesk stays at the forefront of industry trends. Autodesk now has over 95% of revenue recurring, after a gradual transition from licenses the past eight years. We think the change enables Autodesk to extract greater revenue per user as it upsells its loyal and increasingly maturing base.

Wide-moat Autodesk's fourth-quarter results were slightly disappointing, as they missed our expectations all around--despite surpassing FactSet consensus. Nonetheless, management's non-GAAP 2023 outlook was rosier than we were forecasting. Concerning the long term, we continue to think Autodesk has compelling prospects, especially as building information modelling, or BIM, penetration increases. As we roll the model forward, we are raising our fair value estimate to $230 per share from $209 per share. While shares were down 1% after the results, this still leaves Autodesk in fairly valued territory.

Autodesk is considered the global industry standard computer-aided design software. Millions of industry professionals rely on Autodesk software to design and model buildings, manufactured products, animated films, and video games. We think Autodesk will remain the industry standard, as its switching costs and network effect continue to reinforce one another and Autodesk stays at the forefront of industry trends. As the company has still much to benefit from in its transition to a subscription model, we think it will continue to extract greater revenue per user as it upsells its loyal and increasingly maturing base.

Wide-moat Autodesk reported third-quarter financial results largely in line with our expectations. Sales growth, as in the prior quarter, was buoyed by strong year-over-year growth in subscription revenue. We believe that Autodesk continues to benefit from secular industry shifts toward cloud platforms and digital acceleration. At the same time, we think the market has factored in even greener pastures for the wide-moat name. With that in mind, we reiterate our $209 fair value estimate for Autodesk. Despite shares falling 12% after hours to $265 upon less optimistic billings guidance than what was previously given, we view shares as overvalued. Even though there's a gap between our fair value estimate and the market, we continue to consider Autodesk a very high-quality company with significant potential for the top and bottom lines over the long term.

Wide-moat Autodesk strongly finished the first half of fiscal 2022, exceeding our expectations on the top and bottom lines. Sales growth was buoyed by strong year-over-year growth in subscription revenue and strong selling velocity via digital channels. Autodesk continues to benefit from secular industry shifts toward cloud platforms and digital acceleration. To better serve customers making the pivot to its cloud platform, Autodesk announced the launch of Flex, which will become available in September. This initiative will enable Autodesk customers to pay commensurately with their usage. Alongside providing value to existing users, management sees Flex as an opportunity to drive more new customer sales as well.

Autodesk is considered the global industry standard computer-aided design software. Millions of industry professionals rely on Autodesk software to design and model buildings, manufactured products, animated films, and video games. We think Autodesk will remain the industry standard, as its switching costs and network effect continue to reinforce one another and Autodesk stays at the forefront of industry trends. As the company has still much to benefit from in its transition to a subscription model, we think it will continue to extract greater revenue per user as it upsells its loyal and increasingly maturing base.

Wide-moat Autodesk reported a strong start to fiscal 2022, exceeding our expectations on the top and bottom lines. Revenue growth was driven by new product subscriptions, and improvement in usage and renewal rates. Autodesk continues to benefit from secular industry shifts toward cloud-platforms and digital acceleration. Capitalizing on the latter, the company’s architecture, engineering, and construction, or AEC, suite released new product offerings and enhancements in the quarter aimed at creating a set of seamless end-to-end cloud solutions that connect the entire construction workflow. We are encouraged by the continued investments made in high-growth-potential business segments. This quarter’s acquisition of Upchain meaningfully impacts its manufacturing business, but also shows promise in integrating with several other existing offerings.