Autodesk stock falls despite Q3 earnings beat
Autodesk (ADSK) shares fell even as the software company reported third-quarter earnings that beat analyst expectations on both the top and bottom lines and lifted its full-year guidance. However, total billings dropped 11% due to Autodesk shifting its customer billing from a 3-year contract that's paid upfront to an annual payment. Additionally, Piper Sandler downgraded the stock from "Overweight" to a "Neutral" citing margin concerns.
Yahoo Finance's Jared Blikre and Seana Smith break down the details of this trending ticker.
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Video Transcript
SEANA SMITH: All right, Autodesk reporting its third quarter earnings this week, raising its revenue EPS and free cash flow guidance. We take a look at the software company beating the Street's expectations. Revenue up 10% from a year ago. Not all good news, though.
For the company, total billings falling by 11%, thanks to the company's decision to change billing to annually based instead of a three-year contract that was paid upfront. So we're seeing that work its way through the system in terms of this release. Obviously, a huge difference here when you're comparing it to prior years and the results that we have seen in the past.
We also when we point to some of the analysts' worry out there from the Street, a bit of a similar type of story. I think you can say in terms of what we saw play out for HP too, when it comes to Autodesk, some worry here just about managing headwinds going forward. Some of those challenges likely to remain.
We have Piper Sandler downgrading the stock to neutral from overweight, citing that tepid growth and disappointing margins and exactly how that sets up the company here going forward-- one of the big reasons why you're looking at the stock off just about 6% today.
JARED BLIKRE: Yeah. And I was just cycling through some of those charts, get back to that in a second. But here's a comment by Citi, rating the stock a buy. Price target, 261. Autodesk continues to show resilient business trends with a slight beat on the Q3 total revenue. Profitability versus free cash flow upside while leading indicators were mixed. Results show consistency and resiliency against a challenging macro environment.
I don't know how many times I've heard challenging macro environment this earnings season. But as I promised, I'm going to go to the charts here one more time on the YFi Interactive. And just a bunch of chop year to date. Over the last five years, I like to do a five-year chart to see what happened in the pandemic. And like many other issues, it was up and then down after peaking in late 2021. So just following the path of a lot of companies in the industry.
