Autodesk Inc. (ADSK) recently completed the acquisition of German software company PI-VR for an undisclosed amount. PI-VR develops software for the automotive industry. Hence, the addition of PI-VR’s visualization technology (VRED) will expand Autodesk’s existing offerings in the automotive market going forward.
PI-VR’s VRED technology streamlines the car manufacturing process through the use of highly sophisticated visualization techniques on a real-time basis. The technology reduces the use of physical prototypes that lowers manufacturing cost.
Autodesk plans to integrate VRED technology within its own existing portfolio that includes Autodesk Showcase, Autodesk Alias, Autodesk Maya, Autodesk 3ds Max and the Autodesk Design and Creation Suites. The company said that it will continue to sell, support and expand PI-VR solutions going forward.
Autodesk expects the acquisition to have no impact on the guidance issued on November 15, 2012. Currently, Autodesk expects revenues to be in the range of $570 to $600 million and non-GAAP EPS in the range of 43 cents to 51 cents for the fourth quarter of 2013. For 2013, Autodesk expects revenues to be in the range of $2.28 to $2.31 billion and EPS on a non-GAAP basis in the range of $1.84 to $1.92.
Acquisitions have played a pivotal part in developing Autodesk’s business over the last couple of years. Autodesk acquired 23 companies during fiscal 2012 for a total of $221.7 million, significantly higher than $13.5 million in fiscal 2011.
Autodesk continues to expand its product portfolio through the acquisition of small start-ups that are easy to integrate within its own business line. Acquisitions have also helped it to expand its cloud-based product offerings in the recent times. In the first nine months of fiscal 2013, Autodesk acquired 8 companies that include a number of software-as-a-service (SaaS) providers for approximately $204.2 million.
We believe that Autodesk will continue to pursue strategic acquisitions in order to expand its digital prototyping solutions. These solutions are expected to cater to manufacturers of all sizes, enhancing their ability to design, visualize and simulate their products before they are built.
Moreover, the new cloud-based products will boost Autodesk’s subscriber base in the near term. The company is also increasing its penetration in the mobile market by developing software for smartphones and Apple’s (AAPL) iPad. We believe that these initiatives will boost Autodesk’s top-line growth going forward.
However, foreign exchange fluctuations and sluggish macroeconomic environment remain the primary headwinds. Autodesk’s high exposure to Europe amid the lingering financial turmoil in the region keeps us cautious. Moreover, customer concentration and increasing competition are the other headwinds.
We have a Neutral recommendation on Autodesk’s shares over the long term. Currently, Autodesk has a Zacks Rank #3 (Hold).
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