Design software company Autodesk (NASDAQ:ADSK) met Wall Street’s third-quarter 2024 revenue expectations, with revenue up 11% year over year to $1.57 billion. The company expects revenue next quarter to be about $1.63 billion, 0.6% above analyst expectations. Non-GAAP earnings of $2.17 per share were 2.4% above analyst consensus estimates.
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Gain: $1.57 billion vs. analyst estimates of $1.56 billion (11% YoY growth, in line)
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Custom EPS: $2.17 vs. analyst estimates of $2.12 (2.4% better)
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Adjusted operating result: $573 million vs. analyst estimates of $565 million (36.5% margin, 1.4% profit)
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Revenue guidance for Q4 CY2024 is $1.63 billion in the middle, about in line with what analysts expected
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Management has slightly raised its expectations for full-year adjusted earnings per share to $8.32 at the midpoint
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Operating margin: 22%, compared to 23.6% in the same quarter last year
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Free cash flow margin: 12.7%, comparable to the previous quarter
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Invoices: $1.54 billion at the end of the quarter, up 27.9% year over year
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Market capitalization: $68.68 billion
“Autodesk is leading the industry in modernizing its go-to-market movement. These initiatives enable us to build larger and more sustainable direct relationships with our customers and serve them more efficiently. We have already seen significant benefits from these optimization initiatives and there are more to come in the next phase,” said Andrew Anagnost, president and CEO of Autodesk.
Autodesk (NASDAQ:ADSK), founded in 1982 by John Walker and becoming one of the industry’s behemoths, makes computer-aided design (CAD) software for engineering, construction and architecture companies.
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Examining a company’s long-term performance can provide clues about its quality. Any company can perform well for a quarter or two, but the best ones grow consistently over the long term. Over the past three years, Autodesk’s revenue grew at a compound annual growth rate of 12.3%. While this growth is solid on an absolute basis, it lagged behind our software sector benchmark.
This quarter, Autodesk’s revenue growth was 11% year over year, and revenue of $1.57 billion was in line with Wall Street estimates. The company’s management is currently targeting an 11% year-over-year revenue increase in the next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 11.7% over the next twelve months, similar to the three-year rate. This projection is above the industry average and implies that the newer products and services will help support historical revenue performance.
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Billings is a non-GAAP metric often called “cash revenue” because it shows how much money the company collected from customers in a given period. This differs from revenue, which must be recognized in parts over the term of a contract.
Autodesk’s billings totaled $1.54 billion in the third quarter, and growth over the past four quarters has been disappointing, with an average increase of 4.2% year over year. This alternative revenue measure grew more slowly than total revenue, meaning the company is generating revenue faster than it is raising cash — a liquidity headwind that could also indicate a slowdown in future revenue growth.
Customer acquisition cost payback period (CAC) measures the months it takes a company to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a company can break even on its sales and marketing investments.
Autodesk is extremely efficient at acquiring new customers and the CAC payback period this quarter was 9.2 months. The company’s performance gives it the freedom to invest its resources in new product initiatives while maintaining freedom of choice.
We were pleased to see that Autodesk exceeded analyst expectations this quarter. We were also pleased that full-year earnings per share expectations came in slightly ahead of Wall Street estimates. Turnover in the quarter was exactly in line. Overall, this quarter was solid, but judging by the market’s reaction, it appears that stronger numbers and/or expectations may have been expected. Shares fell 2.2% to $311 immediately after the report.
So should you invest in Autodesk now? When making that decision, it is important to take into account the valuation, the business qualities and what happened in the last quarter. We cover that in our useful full research report which you can read here. It’s free.
