Autodesk (ADSK) Down 5.8% Since Last Earnings Report: Can It Bounce Back?

A months have passed since Autodesk’s last revenue report (ADSK). Stocks lost around 5.8% over that time frame, underperforming the S&P 500.

Will the recent negative trend continue until its next results release, or is Autodesk about to break out? Before we dive into how investors and analysts have reacted in recent times, let’s take a look at the latest earnings report to get a better understanding of the important factors.

Higher Autodesk Second Quarter Profit Estimates, Y / Y Revenue Increase

Autodesk reported second-quarter fiscal 2022 non-GAAP earnings of $ 1.21 per share, beating Zacks’ consensus estimate by 9% and up 23.5% year-on-year. ‘other.

Revenue of $ 1.06 billion broke the consensus mark of 0.7% and increased 16% year-over-year. At constant exchange rates (cc), sales are up 14%. The rise was driven by increased subscriptions to new products and higher renewal rates, as well as improved digital sales.

High-end details

Subscription revenue (95.9% of revenue) increased 20.9% year-over-year to $ 1.017 billion. Other income (2.5% of revenue) increased 26.1% to $ 26.1 million in the quarter.

However, maintenance revenue (1.6% of revenue) fell 67% to $ 16.9 million.

Recurring revenue contributed 98% of Autodesk’s revenue for the second quarter of fiscal 2022. The net revenue retention rate was between 100% and 110%.

Geographically, revenue for the Americas (39.9% of revenue) increased 14% from last year’s quarter levels to $ 422.8 million. Europe, Middle East & Africa (EMEA) revenue (38.7% of revenue) increased 16% to $ 410.2 million. Asia-Pacific revenue (21.4% of revenue) increased 21% to $ 226.7 million.

Meanwhile, billings of $ 1.015 billion increased 29% year-over-year in the current quarter.

Details of the top range in terms of product

Autodesk primarily offers four product families, Architecture, Engineering and Construction (AEC), AutoCAD and AutoCAD LT, Manufacturing (MFG), and Media and Entertainment (M&E).

AEC’s revenue (45.2% of revenue) grew 21% year-on-year to $ 478.7 million. AutoCAD and AutoCAD LT revenue (28.7% of revenue) increased 12% to $ 304.4 million. MFG’s revenue (19.6% of revenue) increased 12% to $ 207.7 million.

M&E (5.5% of revenue) increased 10% to $ 58.5 million, while other income (1% of revenue) increased 93% to $ 10.4 million.

Operating results

Non-GAAP gross margin contracted 30 basis points (bps) from last year’s quarter figures to 92.3%.

Non-GAAP operating expenses, as a percentage of revenues, contracted 280 basis points from last year’s quarter levels to 61.1%. Lower operating expenses reflect disciplined cost management during the quarter.

Autodesk reported non-GAAP operating income of $ 330.8 million, up 26.1% year on year. The operating margin increased 200 basis points from last year’s quarter levels to 31%.

Balance sheet and cash flow

As of July 31, 2021, Autodesk had cash and cash equivalents (including marketable securities) of $ 924.9 million, compared to $ 923.2 billion as of April 30, 2021.

Deferred revenue increased 15% to $ 3.3 billion. Deferred unbilled revenue at the end of the second fiscal quarter was $ 843 million, up 124.8% year over year.

The total RPO of $ 4.14 billion and the current RPO of $ 2.85 billion both increased by 24%. The current growth in RPO is primarily driven by increased sales of new products as well as increased strong growth in Enterprise Trade Agreements (EBAs).

The company repurchased 164,000 shares for $ 46 million at an average price of about $ 283 per share. Cash flow from operating activities was $ 202 million compared to $ 336.1 million recorded in the prior quarter. Free cash flow was $ 186 million compared to $ 315.8 million in the prior quarter.

Advice

For the third quarter of fiscal 2022, Autodesk is forecasting revenues of between $ 1.11 billion and $ 1.125 billion. Non-GAAP earnings are expected to be between $ 1.22 and $ 1.28 per share.

Driven by strong second quarter results and increased migration of EBA customers to annual billings from a multi-year upfront payment, Autodesk raised its revenue outlook for fiscal 2022.

For fiscal 2022, Autodesk is forecasting revenue of between $ 4.345 billion and $ 4.385 billion, indicating 15-16% year-over-year growth. Previously, Autodesk forecast revenue of between $ 4.305 billion and $ 4.385 billion, indicating 14-16% year-over-year growth.

Non-GAAP earnings are now expected to be between $ 4.91 and $ 5.06 per share, compared to $ 4.67 to $ 4.97 per share previously forecast.

The migration of EBA customers to annual billings will have a “modest impact” on billings and free cash flow metrics for fiscal 2022, management noted.

Billings are now expected to be between $ 4.875 billion and $ 4.975 billion, suggesting an 18-20% increase year over year. Previously, billings were expected to be between $ 4.93 billion and $ 5.055 billion, implying a 19-22% increase year-over-year.

Free cash flow is expected to be in the range of $ 1.5 billion to $ 1.575 billion, compared to an earlier forecast of $ 1.575 billion to $ 1.65 billion.

How have the estimates evolved since then?

It turns out that revised estimates have trended upward over the past month.

VGM scores

Right now Autodesk has a Growth Score below D, but its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock received a D rating on the value side. , which places it at the bottom. 40% for this investment strategy.

Overall, the stock has an overall VGM score of D. If you’re not strategy-focused, this score is the one you should be interested in.

Outlook

Estimates have broadly trended upward for the stock, and the magnitude of these revisions has been net of zero. Notably, Autodesk has a Zacks Rank # 3 (Hold). We expect the stock to come back online in the coming months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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