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It has been about a month since the last earnings report for Autodesk (ADSK). Shares have added about 10.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Autodesk due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Autodesk Q3 Earnings Top Estimates, Revenues Rise Y/Y
Autodesk reported third-quarter fiscal 2021 non-GAAP earnings of $1.04 per share that beat the Zacks Consensus Estimate by 9.5%.
Moreover, the earnings figure increased 33.3% year over year driven by growth in subscription plan revenues, led by product subscription revenues.
Revenues of $952.4 million beat the consensus mark by 1.3% and grew 13% year over year. At constant currency (cc), revenues were up 14%. The growth was driven by higher subscription revenues.
Subscription revenues (92.9% of revenues) increased 23.7% year over year to $884.4 million.
However, maintenance revenues (4.2% of revenues) slumped 56.4% to $39.8 million. Moreover, other revenues (3% of revenues) decreased 22.7% to $28.2 million in the reported quarter.
Recurring revenues represented 97% of Autodesk’s third-quarter fiscal 2021 revenues. Net revenue retention rate was within 100% to 110%.
Geographically, revenues from the Americas (41.3% of revenues) increased 12.5% from the year-ago quarter to $392.9 million. Europe, Middle East and Africa (EMEA) revenues (38.3% of revenues) increased 10.5% to $364.3 million. Revenues from Asia-Pacific (20.5% of revenues) grew 19.2% to $195.2 million.
Meanwhile, billings of $1.01 billion decreased 1% year over year in the reported quarter.
Product-wise Top-line Details
Autodesk offers primarily four product families, Architecture, Engineering and Construction (AEC), AutoCAD and AutoCAD LT, Manufacturing (MFG), and Media and Entertainment (M&E).
AEC (44% of revenues) revenues increased 17.2% year over year to $419.4 million. AutoCAD and AutoCAD LT (29.3% of revenues) revenues rose 13.6% to $278.8 million. MFG (20.4% of revenues) revenues increased 6.5% to $194.1 million.
M&E (5.7% of revenues) increased 6.7% to $54 million while other revenues (0.6% of revenues) declined 6.2% to $6.1 million.
Autodesk witnessed steady renewal rates during the reported quarter. Partial renewal rates remained relatively steady as well.
Non-GAAP gross margin expanded 50 basis points (bps) from the year-ago quarter to 92.7%.
Research & development, marketing & sales, and general & administrative expenses as a percentage of revenues declined 70 bps, 180 bps and 40 bps year over year, respectively.
As a result, non-GAAP operating expenses, as a percentage of revenues, contracted 290 bps from the year-ago quarter to 62.5%.
The lower operating expenses reflected disciplined cost management in the reported quarter. The company reduced travel and entertainment expense and monitored hiring rate and marketing spend amid the coronavirus lockdown.
Autodesk reported non-GAAP operating income of $287.1 million compared with the year-ago quarter’s figure of $225.3 million.
Balance Sheet & Cash Flow
As of Oct 31, 2020, Autodesk had cash and cash equivalents (including marketable securities) of $1.61 billion compared with $1.51 billion as of Jul 31, 2020.
Deferred revenues increased 21% to $2.93 billion. Unbilled deferred revenues at the end of the third quarter were $650 million.
Remaining performance obligations (RPO) totaled $3.6 billion, up 21% year over year. Current RPO totaled $2.4 billion, up 16%.
The company repurchased shares worth $196.1 million. Cash flow from operating activities was $361.1 million, compared with $91.2 million posted in the previous quarter. Free cash flow was $340.2 million, compared with the previous quarter’s figure of $64.4 million.
For fourth-quarter fiscal 2021, Autodesk expects revenues between $999 million and $1.01 billion. Non-GAAP earnings are anticipated to be in the range of $1.04 and $1.10 per share.
For fiscal 2021, Autodesk expects revenues between $3.75 billion and $3.76 billion, indicating growth of 15% year over year. Non-GAAP earnings are expected between $3.91 and $3.97 per share.
Billings are projected to be $4.07-$4.13 billion, implying a decline 1 year over year.
Free cash flow is expected between $1.30 billion and $1.36 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
Currently, Autodesk has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Autodesk has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Autodesk, Inc. (ADSK) : Free Stock Analysis Report
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