Autodesk's (NASDAQ:ADSK) Q3 Sales Top Estimates
Design software company Autodesk (NASDAQ:ADSK) reported results ahead of analysts' expectations in Q3 FY2024, with revenue up 10.5% year on year to $1.41 billion. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $1.43 billion was in line with expectations. Turning to EPS, Autodesk made a non-GAAP profit of $2.07 per share, improving from its profit of $1.70 per share in the same quarter last year.
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Autodesk (ADSK) Q3 FY2024 Highlights:
Revenue: $1.41 billion vs analyst estimates of $1.39 billion (1.9% beat)
EPS (non-GAAP): $2.07 vs analyst estimates of $1.99 (4% beat)
Revenue Guidance for Q4 2024 is $1.43 billion at the midpoint, roughly in line with what analysts were expecting
Free Cash Flow of $13 million, down 89.8% from the previous quarter
Gross Margin (GAAP): 91%, in line with the same quarter last year
"Autodesk AI and Platform Services will enable Autodesk, our customers, and partners to build more valuable, data driven, and connected products and services in our industry clouds and on our platform," said Andrew Anagnost, Autodesk president and CEO.
Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.
Design Software
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Sales Growth
As you can see below, Autodesk's revenue growth has been unremarkable over the last two years, growing from $1.13 billion in Q3 FY2022 to $1.41 billion this quarter.
This quarter, Autodesk's quarterly revenue was once again up 10.5% year on year. Looking at the last two quarters, we can see that Autodesk's revenue increased by $69 million in Q3 while it grew $76 million in Q2 2024. This steady quarter-on-quarter growth shows that the company can more or less maintain its growth trajectory.
Next quarter's guidance suggests that Autodesk is expecting revenue to grow 8.5% year on year to $1.43 billion, in line with the 8.8% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 9.7% over the next 12 months before the earnings results announcement.
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Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Autodesk's free cash flow came in at $13 million in Q3, down 97.2% year on year.
Autodesk has generated $1.76 billion in free cash flow over the last 12 months, an eye-popping 33.8% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from Autodesk's Q3 Results
Sporting a market capitalization of $46.96 billion, more than $1.95 billion in cash on hand, and positive free cash flow over the last 12 months, we believe that Autodesk is attractively positioned to invest in growth.
It was encouraging to see Autodesk top analysts' revenue and EPS estimates this quarter, driven by better-than-expected billings and outperformance in its Architecture, Engineering, and Construction ("AEC") division. That stood out as a positive in these results. On the other hand, its free cash flow and revenue guidance for next quarter fell short of Wall Street's projections. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 3.2% after reporting and currently trades at $224.5 per share.
So should you invest in Autodesk right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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The author has no position in any of the stocks mentioned in this report.
