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Autodesk (ADSK) to Report Q2 Earnings: What's in the Cards?

Zacks Equity Research

Autodesk ADSK is set to report second-quarter fiscal 2020 results on Aug 27.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 7.1%.

In the last reported quarter, Autodesk’s non-GAAP earnings of 45 cents per share missed the Zacks Consensus Estimate by a couple of cents. Revenues of $735.5 million also lagged the consensus mark of $741 million.

However, the year-over-year revenue growth of 31.4% was driven by higher subscription revenues that accounted for 81% of total revenues.

For the second quarter, Autodesk expects revenues between $782 million and $792 million. Non-GAAP earnings are anticipated to be 59-63 cents per share.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 61 cents, unchanged over the past 30 days. Further, the consensus mark for revenues is pegged at $787.4 million, up 28.7% from the figure reported in the year-ago quarter.
 

Autodesk, Inc. Price, Consensus and EPS Surprise

 

Autodesk, Inc. Price, Consensus and EPS Surprise

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

Let’s see how things are shaping up for the upcoming announcement.

Factors Likely to Influence Q2 Results

Autodesk’s second-quarter results are expected to benefit from robust growth in subscription revenues, rapid adoption of BIM 360 products and success of the maintenance to subscription (M2S) program.

Strong annual recurring revenues (ARR), which were up 32% year over year in the last reported quarter, reflect the success of the company’s business model transition and solid overall growth. Further, solid net revenue retention rate highlights a healthy renewal rate, which is expected to have continued in the second quarter.

Additionally, acquisitions of Assemble Systems, PlanGrid and BuildingConnected have strengthened the company’s expertise in preconstruction capabilities, document-centric workloads & field execution, and bidding & risk management, respectively. These have helped Autodesk enhance its construction business that is likely to drive the top line.

During the to-be-reported quarter, Autodesk launched PlanGrid Advanced RFIs and Project Hub that give construction teams’ greater visibility into a project's progress and ability to tackle unforeseen challenges.

However, sluggish growth in Maintenance revenues due to the continued migration of maintenance plan subscriptions to subscription plan is expected to hurt top-line performance.

Moreover, Autodesk expects free cash flow to decline sequentially in the second quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Meanwhile, the Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

Autodesk has a Zacks Rank #4 but an Earnings ESP of +0.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Verint Systems VRNT has an Earnings ESP of +3.49% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Smartsheet SMAR has an Earnings ESP of +11.11% and a Zacks Rank #3.

lululemon athletica LULU has an Earnings ESP of +2.74% and a Zacks Rank #3.

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