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Autodesk (ADSK) Q3 Earnings & Revenues Up Y/Y, Shares Down

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Autodesk ADSK reported third-quarter fiscal 2022 non-GAAP earnings of $1.33 per share that increased 27.9% year over year.

Revenues of $1.126 billion beat the consensus mark by 0.7% and rose 18% year over year. At constant currency (cc), revenues were up 17%. The upside was driven by new product subscriptions and higher renewal rates.

Owing to supply chain troubles, labor shortage, highly-evolving COVID situation and certain country-specific challenges, Autodesk lowered fiscal 2022 billings and free cash flow outlook at the mid-point by $150 million and $100 million, respectively.

Billings are now projected to be $4.74-$4.8 billion, suggesting an increase of 14-16% year over year. Previously, billings were projected to be $4.875-$4.795 billion, indicating an increase of 18-20% year over year.

Free cash flow is expected between $1.42 billion and $1.46 billion compared with the earlier guidance of $1.5-$1.575 billion.

Following the announcement, shares are down 13.8% in the premarket trading on Nov 24. In the past year, shares of Autodesk have returned 12.1% compared with the industry’s growth of 50%.

Autodesk, Inc. Price, Consensus and EPS Surprise

Autodesk, Inc. Price, Consensus and EPS Surprise
Autodesk, Inc. Price, Consensus and EPS Surprise

Autodesk, Inc. price-consensus-eps-surprise-chart | Autodesk, Inc. Quote

Top-Line Details

Subscription revenues (95.1% of revenues) increased 21% year over year (up 19% on a constant currency basis) to $1.071 billion.

However, maintenance revenues (1.6% of revenues) slumped 56% to $18 million. Other revenues (3.3% of revenues) increased 33% to $37.5 million in the reported quarter.

Recurring revenues contributed 97% to Autodesk’s third-quarter fiscal 2022 revenues. Net revenue retention rate was within the 100-110% range.

Geographically, revenues from the Americas (41% of revenues) increased 18% from the year-ago quarter’s levels to $461.9 million. Europe, Middle East and Africa (EMEA) revenues (38.5% of revenues) increased 19% to $433.2 million. Revenues from Asia-Pacific (20.5% of revenues) rallied 18% to $230.7 million.

Billings of $1.168 billion increased 16% year over year in the reported quarter.

Products Top-Line Details

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

AEC (45.4% of revenues) revenues increased 22% year over year to $511.1 million. AutoCAD and AutoCAD LT (28.3% of revenues) revenues rose 14% to $318.4 million. MFG (20% of revenues) revenues increased 16% to $225 million.

M&E (5.6% of revenues) increased 17% to $63 million, while other revenues (0.7% of revenues) increased 36% to $8.3 million.

Operating Results

Non-GAAP gross margin contracted 100 basis points (bps) from the year-ago quarter’s figures to 92%.

Non-GAAP operating expenses increased 13.4% year over year to $675.2 million in the quarter under review.

Autodesk reported a non-GAAP operating income of $365 million, up 27.1% year over year. Non-GAAP operating margin expanded 200 bps from the year-ago quarter’s levels to 32%.

Balance Sheet & Cash Flow

As of Oct 31, 2021, Autodesk had cash and cash equivalents (including marketable securities) of $1.792 billion compared with $924.9 million as of Jul 31, 2021.

Deferred revenues increased 14% to $3.3 billion. Unbilled deferred revenues at the end of the fiscal third quarter were $888.5 million, up 36.8% year over year.

Total RPO of $4.2 billion and current RPO of $2.9 billion increased 18% and 21%, respectively.

In the quarter under review, the company repurchased 980,000 shares for $287 million at an average price of approximately $293 per share. Cash flow from operating activities was $270 million compared with $202 million posted in the previous quarter. Free cash flow was $257 million compared with the previous quarter’s figure of $186 million.

Guidance

For fourth-quarter fiscal 2022, Autodesk expects revenues between $1.185 billion and $1.2 billion. Non-GAAP earnings are anticipated in the range of $1.41-$1.47 per share.

The Zacks Consensus Estimate for revenues and earnings is pegged at $1.2 billion and $1.47 per share, respectively.

For fiscal 2022, Autodesk expects revenues between $4.36 billion and $4.375 billion, indicating growth of 15% year over year. Earlier, Autodesk projected revenues between $4.345 billion and $4.385 billion, indicating growth of 15-16% year over year.

Non-GAAP earnings are expected between $4.98 and $5.04 per share compared with $4.91-$5.06 per share projected earlier.

The Zacks Consensus Estimate for revenues and earnings is pegged at $4.37 billion and $4.97 per share, respectively.

Zacks Rank & Stocks to Consider

Currently, Autodesk carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth consideration in the broader technology space includes Arrow Electronics ARW, Alphabet GOOGL and Monolithic Power Systems MPWR.

While Alphabet sport a Zacks Rank #1 (Strong Buy), Arrow Electronics and Monolithic carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arrow Electronics’ shares have gained 33.2% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 27.4%.

Alphabet’s shares have surged 66.4% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25.8%.

Monolithic’s shares have rallied 49.1% on a year-to-date basis. The long-term earnings growth rate for the company is currently projected at 25%.


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