Shares of Autodesk Inc. jumped more than 9% in after-hours trading today after it posted second-quarter results that topped expectations across the board and it also raised its full-year guidance.
Autodesk’s flagship product is an application called AutoCAD that engineers use to design buildings and machines. The software, which was originally released in 1982, has received numerous artificial intelligence upgrades over the past few years. AutoCAD can now explain project details for users and automatically generate drawings.
AutoCAD is often used in data center design projects. The software lends itself to architecting not only a data center’s structure, or shell, but also some of the equipment inside. That includes the power management modules responsible for delivering electricity to servers.
The tech industry’s investments in new AI data centers had a positive impact on Autodesk’s financials during the second quarter. “We saw strength in AECO, where our customers are benefiting from sustained investment in data centers, infrastructure, and industrial buildings, which is more than offsetting softness in commercial,” Autodesk Chief Financial Officer Janesh Moorjani told investors. AECO is an acronym for the architecture, engineering, construction and operations sectors.
Construction projects are not Autodesk’s sole revenue source. The company also makes software tools for designing mechanical systems such as manufacturing equipment. For the media and entertainment sector, it provides a suite of applications that can be used to produce computer-generated imagery.
Autodesk’s revenue rose 17% year-over-year in the second quarter, to $1.76 billion. That’s about 2% better than the $1.72 billion predicted by analysts. Much of the growth was driven by the company’s AECO business, which saw sales climb 23%, to $878 million.
The company said a recently launched revamp of its go-to-market strategy contributed $105 million in revenue during the second quarter. It historically sold its software through a network of partners but earlier this year switched to billing customers directly.
The move was accompanied by job cuts in the company’s go-to-market organization. Autodesk laid off about 1,350 employees, or 9% of its workforce, as part of the initiative.
“We initiated the optimization phase of our sales and marketing efficiency plan in February,” Moorjani said. “We are making good progress and are on track to realize its expected benefits. These efficiency gains, combined with inherent operating leverage, set us up well to expand our operating margin over time.”
Autodesk achieved a 39% adjusted operating margin in the second quarter. That allowed it to deliver adjusted earnings of $2.62 per share, well above the $2.45 forecast by analysts.
The company raised its full-year guidance to reflect stronger-than-expected demand for its VFX software. Autodesk now expects to generate $7.025 billion to $7.075 billion in revenue, which is about 1% higher than the consensus estimate at the midpoint. The company’s adjusted earnings forecast of between $9.80 and $9.98 per share likewise topped analyst projections.
Image: Autodesk
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